Dairy Spot Call Auction - FAQ

When will the transition to electronic auction take place?

There will be a phased approach to electronification, beginning with Non-fat Dry Milk, followed by Butter, and then Cheese. Non-fat Dry Milk electronification is scheduled for a December 5 launch. Specific dates for butter and cheese will be announced later, although we anticipate all spot call markets will be electronic by the end of first quarter of 2017.

How do you register to trade/broker the spot call markets on CME Direct Auctions?

The dairy spot call markets will be available on the CME Direct Auction Platform. Registration will be available on October 5.

Subscribe to receive a notification once registration is available.

How can you view the market even if you are not planning on trading?

There will be a registration option for “read only” access for both the test and production environments. 

When will the auction open and close?

As the markets transition from open outcry to electronic auction, there will be some variation in open and close times. Once a market moves electronic though, the start and hard stop times will not change. During the transition there will be a 20-minute gap between the hard stop time of the last open outcry auction and the beginning of the first electronic auction. There will be a five-minute gap in between electronic auctions.

Specific open and close times will be made available at a later date.

What is the timing of an auction session?

The auction will commence regular trading for a period of two minutes. After two minutes, a 15-second call session will begin. If there is a trade or a better bid/offer entered during the call session, the session will be extended an additional 15 seconds. This process can repeat itself up until the hard close of the auction. Prior to the hard close, it is possible to have a final call period that is less than 15 seconds as trading cannot extend past the hard close. There is no “posting period,” so once trading enters the call session, the auction will either have an extended call session, or it will end.

Will the sessions run the full amount of time?

Sessions can run a maximum of ten minutes, at which point there would be a hard stop, however sessions can end early if there is no activity to extend the auction.

Can orders be canceled during the call session?

Orders that are at the top of book (orders at the best bid and best offer prices) cannot be canceled, held, or worsened during the call session. Orders that are at a price that is below the best bid, or above the best offer can be canceled during the call session. Please note, there is always a possibility that a trade may occur, and an order that was not previously top of book moves to the top and is unable to be canceled. All orders may be canceled, held or worsened during regular trading prior to the call session.

When can I enter an order before the auction?

You will be able to pull up an order ticket for any electronic market 20 minutes prior to the beginning of the first electronic auction. The order will need to be manually activated once its respective session begins.

How will the mechanics be different than the open outcry model?

In general, most rules will remain the same. Differences will be around order execution and a few enhancements. For example, participants will be able to see market depth and have the ability to sweep the book. The order of the sessions will change to accommodate Non-fat Dry Milk moving first to the electronic platform. Detailed instructions around the mechanics of CME Direct Auctions will be available in a user manual once mock trading begins.

Will the spot call delivery system change?

Electronification will only occur at the trade execution level, so participants will continue to interact with the spot call delivery system as they do today.

Can I continue to use my brokers?

Yes, you can absolutely still use your existing brokers as long as they are also registered on the CME Direct Auction Platform. Additionally, your clearing member firm must assign your broker to your clearing account through Account Manager.

Will my activity be anonymous?

CME Group will only reveal the counterparty information to the other counterparty at the end of each session. We will not reveal the information publicly. Brokers who execute both sides of an order will know the respective counterparties prior to the end of a session.

How does CME Group market regulation oversee the market?

The open outcry spot call market is regulated today in accordance with CME Rulebook Chapter 11 and will continue to be monitored under these rules. Electronic trading will be governed by a new CME Rulebook Chapter 12. With electronic trading, CME Group market regulation will have the capability of real-time visibility into market activity, including unfilled bids and offers, at the trading firm level.

If participants believe there is disruptive behavior in the spot call markets, regardless of venue, market regulation should be contacted at +1 312-341-7970.

Submit a complaint anonymously.
Self-report a violation.

If the Market Regulation Department finds that a party, including a member, has violated a CME Spot Market Rule, the Market Regulation Department may take one or more actions including, restrict, suspend or terminate the party’s access to CME Spot Market and/or any CME Group exchange.

Can I buy and sell the same load during the same session?

No. Title has to transfer between buyer and seller before that load can be brought back for sale on the spot market.

Are pre-execution communications allowed?

No, pre-execution communications are not permitted in the dairy spot call markets, regardless of whether the transaction is executed via open outcry or electronically. Pre-execution communications are only permitted for Dairy futures and options executed electronically and according to the procedures set forth by Market Regulation.

View pre-execution communication rules.

What happens if I make a mistake?

CME Group has created an error policy which will be included in the CME Rulebook under Chapter 12 once published.

If a participant consummates a CME Spot Market trade in error, such participant must adhere to the following procedures to attempt to transfer the trade and the corresponding delivery obligation to another party:

  1. The participant must report the erroneous trade execution to Market Regulation and CME Clearing no later than 30 minutes after execution.
  2. The participant must make every effort to find another party willing to accept the trade and the corresponding delivery obligation, which must occur prior to the delivery deadline established by CME Spot Market.
  3. The party accepting the trade and delivery obligation must assume the trade at the original execution price.
  4. The error maker must notify the Exchange of the identity of the party willing to accepting the trade and the corresponding delivery obligation.
    The error maker will be assessed a fee of $500.00.

All error notifications are subject to review and approval by the Exchange. Notwithstanding the error procedures set forth above, if an error maker does not identify another party willing to accept the trade and the corresponding delivery obligation, all deliveries must be completed within the delivery timelines established by CME Spot Market. CME will not break trades that are matched in the CME Spot Market.

When do I have to be registered in order to participate on December 5?

Participants will need to be registered by November 21 in order to be onboarded by December 5. However, we encourage participants to register as soon as possible so they can become familiar with the system and participate in mock trading sessions.

Will I have a chance to participate in mock trading sessions?

Participants who want to participate in mock testing should register for the test environment. CME Group will hold mock testing sessions every Tuesday, Wednesday and Thursday beginning at 2 p.m. CT from October 18 to December 1.

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Dairy Spot Call Auction

Read details about the transition to an electronic auction for Dairy products at CME Group.

Learn More