In light of recent logistical developments in the market for gold, COMEX is introducing a physically-delivered gold contract with additional delivery and trading functionalities. This contract will enable delivery in New York City of Kilo, 100 oz and 400 oz bar sizes for maximum flexibility. As announced in the press release, the contract will also be enabled for inter-commodity spread trading against the GC benchmark gold futures contract, thereby giving existing GC traders efficient access to this new market.
The Gold (Enhanced Delivery) futures contract (commodity code 4GC) is a physically-delivered gold contract listed on COMEX. It trades in U.S. dollars per troy ounce with a unit size of 100 troy ounces. The listing cycle follows GC market convention. Physical delivery is made via 100 troy ounce bars, or kilo bars, or 400 troy ounce bars in COMEX approved depositories. Because of the three (3) different sizes available for delivery, the Exchange makes use of an Accumulated Certificates of Exchange (“ACEs”) mechanism to facilitate efficient deliveries – more on the ACE mechanism can be found below.
|Contract Title||Gold (Enhanced Delivery) futures|
|CME Globex/CME ClearPort Commodity Code||4GC|
|Contract Size||100 troy ounces|
|Listing Schedule||Monthly contracts listed for 3 consecutive months and any February, April, August, and October in the nearest 23 months and any June and December in the nearest 72 months|
|Price Quotation||U.S. dollars and cents per troy ounce|
|First Listed Month||April 2020|
|Minimum Price Fluctuation||$0.10 per troy ounce|
|Value per tick||$10.00|
|Termination of Trading||Trading terminates on the third last business day of the contract month.|
|CME Globex Matching Algorithm||First in First Out (FIFO)|
|Delivery Period||Delivery may take place on any business day beginning on the first business day of the delivery month or any subsequent business day of the delivery month, but not later than the last business day of the current delivery month.|
|Delivery Instrument||Physical delivery via 100 troy ounce bars, or kilo bars, or 400 troy ounce bars. 400 troy ounce bars are deliverable via “Accumulated Certificates of Exchange” (ACE) certificates issued by the Clearing House.|
Preliminary specifications are pending regulatory reviews.
Very little, this contract is similar to GC Gold with the additional ability to deliver 400 oz bars into COMEX approved depositories.
There are significant legal and regulatory concerns with making changes to any existing contract with significant open interest, and we always work to preserve the integrity of each contract for all open interest holders – short and long. In this case, we chose to create a new contract that will provide a broader range of delivery size options for all prospective traders while maintaining and complementing the delivery terms of the benchmark GC contract for current open interest holders. This also creates inter-commodity spread opportunities as well and provides maximum flexibility for all of our clients.
Yes, the GC contract will not be modified in any way. This includes GC futures and options.
No. The new 4GC and benchmark GC contracts are not fungible, meaning that a position in GC cannot be exchanged into an equivalent position in 4GC. However, 4GC will be enabled for inter-commodity spread trading against GC on CME Globex, providing customers the ability to trade 4GC against GC on screen without execution risk on either leg of the trade.
CME Clearing facilitates 400 oz bar deliveries through the introduction of the Accumulated Certificates of Exchange (“ACE”) mechanism.
A 400 oz bar cannot be used to facilitate delivery of a single contract with a unit size of 100 oz due to its larger size. The ACE mechanism facilitates the conversion of 400 oz bars in fractional units which can be used for delivery. Once a 400 oz bar is warranted, it can be assigned to the Clearing House, and in return the Clearing House will issue four ACEs. Each ACE will represent an equal share of ownership of the larger bar. That means that each 400 oz bar will result in the issuance of 4 ACEs. ACEs can only be issued against the 400 oz bars, not the smaller 100 oz or kilo bars.
Once issued, ACEs can be held as long as necessary. A client can use ACEs to comply with short delivery requirements (1 ACEs reflecting one futures contract of 100 oz) or it can be swapped back against a 400 oz bar by exchanging 4 ACEs. A customer can comply with delivery requirements with ACEs or regular bars, or a combination of both.
No, we anticipate that all COMEX delivery points for GC will remain unchanged while also facilitating delivery for 4GC. As before, all eligible locations for delivery of GC and 4GC will fall within a 150-mile radius of New York City.
See an explanation of the physical delivery process for Gold (Enhanced Delivery) futures here.
While the contracts will not be fungible, we will enable inter-commodity spreads between the two contracts enabling participants to move positions between contracts.
4GC will settle independently from GC, with details to follow on procedures.
The new 4GC contract margins will be very similar to the GC contract and may initially have approximately a 90% credit to GC.
The Exchange is not making any changes to GC, including option contracts where GC is the underlying contract.
Depending on how liquidity builds up in the new contract, COMEX may consider listing options on 4GC subsequently.
|Product Name||CME Globex/ClearPort||Bloomberg||Refinitiv Composite RIC Root||TT||CQG||DTN||Fidessa||FIS Global||ION (Pats & FFastFill)||Itiviti (Orc & Tbricks)|
|Gold (Enhanced Delivery) Futures||4GC||IGCA Comdty||GCD||4GC||4GC||Q4GC||4GC||4GC||4GC||4GC|
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