News Release

CME Group to Offer OTC Grain Swaps through CME ClearPort

Thu Mar 19 2009

DTN to Provide Cash Settlement Prices for New Agriculture OTC Products

 

CHICAGO, March 19 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange, announced that the Commodity Futures Trading Commission (CFTC) has given regulatory approval to clear corn basis swaps and calendar swaps for corn, wheat and soybeans. The swaps, which will be subject to comparable rules and regulations for listed corn, wheat and soybean futures contracts on the CBOT, are scheduled to be available beginning Monday, April 6, through CME ClearPort®, an open clearing service for over-the-counter (OTC) products.

 

In addition, DTN, a division of Telvent, the leading business information services company focused on agricultural, energy and environmental markets, has signed an agreement to be the exclusive provider of daily cash bid prices used to calculate daily settlement prices for the corn basis swap products.

 

"Changes in global grain and oil seed markets are creating new challenges for market users, including the need to hedge increasingly volatile basis risk in grain and oilseed markets. CME Group is responding to market needs by innovating the first-ever cleared OTC grain swaps, which will offer market users the ability to create tailored hedges in a centrally cleared environment," said Rick Redding, CME Group Managing Director of Products and Services. "This is a key component of our CME ClearPort strategy, which already includes more than 600 energy-related OTC products, to expand into additional asset classes starting with agriculture."

 

"With the increasing volatility in the grains markets, it is imperative that industry leaders collaborate to provide new ways to manage the associated risks," said Robert Gordon, chief executive officer, DTN. "DTN's unparalleled network of grain producing, originating and merchandising customers uniquely qualifies DTN to partner with CME Group on this initiative. We look forward to being a key participant in the continuing evolution of the grains markets."

 

Corn basis swaps help buyers and sellers manage the risk of price differentials between futures delivery points and local markets. Calendar swaps, which are based on the average daily settlement price for the corresponding underlying futures contract during the final month of clearing the swap, offer another way to manage price volatility in corn, wheat and soybean markets.

 

Both types of OTC grain swaps, which can be used as a complement to CME Group's benchmark grain futures and options contracts, will be subject to position accountability, transaction reporting, and margining and risk management standards that are comparable to grain futures contracts.

 

 

 

About CME Group

CME Group (www.cmegroup.com) is the world's largest and most diverse derivatives exchange. Building on the heritage of CME, CBOT and NYMEX, CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on trading floors in Chicago and New York. By acting as the buyer to every seller and the seller to every buyer, CME Clearing virtually eliminates counterparty credit risk. CME Clearing also offers financial safeguards to help mitigate systemic risk, providing the security and confidence market participants need to operate, invest and grow. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, and alternative investment products such as weather and real estate. CME Group is listed on NASDAQ under the symbol "CME."

 

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at www.cmegroup.com.

 

About DTN

Omaha-based DTN, a division of Telvent , is the leading business information services company focused on agricultural, energy and environmental markets. The company delivers business critical information to more than 700,000 subscribers across its vertical markets. For more information about DTN visit www.dtn.com or call (952) 851-7239.

 

About Telvent

Telvent is a unique global company listed on the NASDAQ Stock Exchange and a component of the CleanTech Index™ - the first, and only, stock market index of leading clean technology ("cleantech") companies.

 

Telvent, the IT company for a sustainable and secure world, specializes in high-value-added products, services and integrated solutions in the Energy, Transportation, Environmental and Agriculture industry segments, as well as Global Services. Its innovative technology and proven experience help ensure secure and efficient management of the operating and business processes of the world's leading companies (www.telvent.com).

CME-G

SOURCE: CME Group

Web site: http://www.cmegroup.com/

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