FAQ: Black Sea Sunflower Oil Financially Settled (Platts) Futures

1. What product is being launched and when?

CME Group is launching Black Sea Sunflower Oil Financially Settled (Platts) futures (FOB Ukraine) contract on the CBOT exchange.

The contract size is 25 tonnes and quoted in US dollar and cents per tonne. The contract tick size is $0.50 per tonne and tick value is $12.50. The commodity code is BSF.

The first trade day is August 26; November 2019 will be the first listed month available for trading and clearing. More details available on www.cmegroup.com/blacksea

2. What is the regulatory jurisdiction of the Black Sea Sunflower Oil Financially Settled (Platts) futures contract?

The Black Sea Sunflower Oil Financially Settled (Platts) futures contract is listed in the US by CBOT and cleared in the US by CME Clearing. The regulator is the CFTC.

3. What is the underlying reference price?

The Black Sea Sunflower Oil Financially Settled (Platts) futures contract is based on the Sunflower Oil FOB Black Sea Ukraine price assessment published by Platts each business day.

4. What is the Platts Sunflower Oil Black Sea FOB Ukraine assessment?

The price assessment reflects the following characteristics:

  • Origin and Quality: Ukrainian origin raw sunflower oil with a free fatty acid basis content of 2%, maximum 3%, a maximum moisture content of 0.5%, a maximum impurities content of 0.5%, a flash point of 121 degrees Celsius minimum, and a maximum hydrocarbon content of 50 milligrams per kilogram.
  • Cargo size: 3000 metric tonnes
  • Delivery Location: FOB Chornomorsk
  • Loading period: loading one or two calendar months forward from the month of the assessment date. The shipment month assessed rolls to the following calendar month on the 16th of the current month.

5. How is the final settlement price (the floating price) of the futures contract calculated?

The final settlement price of the Black Sea Sunflower Oil Financially Settled (Platts) futures is equal to the arithmetic average of all values of the Platts Sunflower Oil Black Sea FOB Ukraine assessments published during the contract month settlement period, rounded to the nearest $0.01.

The Settlement Period for a specified contract month is the one-month period that starts on, and includes, the 16th calendar day of the month that is two months prior to the contract calendar month, and ends on, and includes the 15th calendar day of the month prior to the contract calendar month. Taking November 2019 listed month as an example, the settlement period starts on September 16 and ends on October 15.

6. How does CME Group settle the futures on a daily basis?

CME Group will provide daily settlement prices for the listed Black Sea Sunflower Oil Financially Settled (Platts) futures months. The settlements will be determined using a combination of indicative values provided by brokers active in the futures market and traded futures values.

7. Are there price limits?

Yes, there are price limits on CME Globex and CME ClearPort.

8. How can the futures contract be traded?

The futures contract is available for trading on the CME Globex electronic trading platform and for submission for clearing via CME ClearPort.

9. The futures contract is available to trade as a block. How does it work?

Subject to certain requirements met, such as minimum size, the futures contract can be privately negotiated via brokers as a block trade and submitted into CME ClearPort for clearing.

10. What are the requirements for a block trade?

There are minimum quantity and reporting time requirements. The minimum block trade size is 5 contracts, and trades need to be reported by the broker within 15 minutes of execution.

Firms need to be classified as an Eligible Contract Participant (ECP) to engage in block trades. The definition of ECP can be found in Section 1a(18) of the Commodity Exchange Act.

11. What are the hours for trade entry on CME ClearPort for clearing?

Block trades may be entered on CME ClearPort from 6:00 p.m. CT Sunday to 5:45 p.m. Friday CT, with a 60-minute pause each day from 4:00 p.m. to 5:00 p.m. CT.

12. Are trades executed at 1:30 p.m. US Central Time for today or tomorrow’s trade?

All transactions on CME Globex and CME ClearPort through 4:00 p.m. CT will be considered for that trade date.

13. What are the position limits?

The Black Sea Sunflower Oil Financially Settled (Platts) futures will have a spot month limit of 2,000 contracts for August and September and 2,500 contracts for all other listed months. Single month accountability level and all month accountability level are both set at 2,500 contracts.

14. What is the listing schedule?

Monthly contracts will be listed for 12 consecutive months. Monthly contracts for a new month will be added following the termination of trading in the front month.

15. I am a bona fide hedger and I need to exceed position limits. Can I apply for a hedge exemption?

Yes, you can apply for a hedge exemption. Market participants may be eligible to receive an exemption from position limits in accordance with Rule 559 based on having bona fide hedging positions (as defined by CFTC Regulation §1.3(z)(1)), risk management positions and/or arbitrage and spread positions.

To obtain an exemption application or for further information on the exemption application process, contact us at Hedgeprogram@cmegroup.com.

16. How do I start trading and clearing this contract?

Contact your clearing member or blacksea@cmegroup.com to get more information on getting set-up to trade the contract on CME Globex and/or as a Block on CME ClearPort. Details are also available at www.cmegroup.com/blacksea.

* Contract and its specifications are subject to regulatory approval.