CFTC Blocks for Now CME's Plan to Offer 24/7 Oil Futures
The Commodity Futures Trading Commission has blocked for now CME Group Inc.’s bid to start offering round-the-clock trading in oil futures.
(Bloomberg) — The Commodity Futures Trading Commission has blocked for now CME Group Inc.’s bid to start offering round-the-clock trading in oil futures.
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The regulator said it won’t allow the exchange to move ahead quickly with a contract that could have started trading as soon as Friday, according to a statement Thursday.
CME filed its plans with the CFTC on Wednesday, according to the regulator, using a process that typically allows contracts to start trading within about 24 hours. CME said in June that it would list smaller-sized, round-the-clock contracts in oil that would start trading on Aug. 30. The agency said soon after CME’s announcement that it would review trading of 24/7 futures contracts across different asset classes, as well as in so-called perpetuals contracts linked to oil and energy markets.
“As I’ve said repeatedly, we do not take a one-size-fits-all approach to 24/7 trading,” CFTC Chairman Michael Selig said in an emailed statement. “CME’s decision to disregard the Commission’s effort to undertake a reasoned analysis of the critical issues at stake is wholly inappropriate and necessitates Commission action to stay the certification.”
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Selig said the CFTC “encourages exchanges to work with agency staff to address potential legal issues before seeking to list novel contracts.”
The futures and swaps regulator said it’s still reviewing a separate filing for continuous oil futures trading that CME filed through a different process that allows the regulator to give formal approval over a longer timeline.
“We work with the Commission on their review of any new product,” CME said in an emailed statement. “For contracts such as 10 Barrel crude oil, which is a smaller version of an existing product but available 24/7, we would typically self-certify.”
CME said that, “at the CFTC’s request,” the company also filed under section 40.3, which provides more time for review before launch.
The Financial Times reported earlier Thursday that the CFTC planned to block CME’s self-certified contract. Bloomberg reported in June that the agency was considering such a move, which now heightens tensions with its regulator.
(Adds background on decision starting in third paragraph.)