LONDON, Jan. 27, 2015 /PRNewswire/ -- CME Group, the
world's leading and most diverse derivatives marketplace, today
announced the launch of a physically delivered and a financially
settled cocoa futures contract. The launch of a cocoa futures
contract for physical delivery will represent CME Group's first
entry into deliverable soft commodities. These contracts will be
listed on CME Group's European exchange, CME Europe, for first
trade date on 30 March, 2015. Both
contracts are authorised and approved by the United Kingdom (UK) Financial Conduct
Authority.
The new Physically Delivered Cocoa futures contract (contract
code CCP) will respond to demand from the cocoa market for an
improved hedging mechanism that better reflects the underlying
physical market. The contract design is a result of extensive
consultation and collaboration with many of the leading
participants in the international cocoa trade and industry.
Physically Delivered Cocoa futures will be the first contract to
include pre-payment of delivery-out charges. This key feature will
provide ease of access for receivers and therefore improved
conditions for convergence between futures and cash-market prices.
The new contract will be denominated in euros to ensure broad
appeal to the global cocoa trade, from origin through to chocolate
manufacturer.
"Many of the leading participants in the cocoa trade and
industry would like to see a deliverable cocoa futures contract
denominated in euros," said Cees
Vermaas, Managing Director and CEO of CME Europe. "That
dovetails with the reason why CME Europe is here – to provide risk
management tools for customers in the European time zone."
CME Group will also launch a U.S. dollar-denominated,
Cash-Settled Cocoa futures contract (contract code CCC) to provide
customers with a cost-effective and efficient way to arbitrage
between the London and
New York cocoa futures markets.
Customers will also be able to take advantage of the margin
efficiencies available from having both contracts cleared by CME
Clearing Europe.
Demand for cocoa products, especially chocolate, is expected to
grow rapidly, and has the potential to outpace supply through 2020.
These and other factors can lead to volatile prices and underscore
the need for new contracts to enable global cocoa participants to
better manage their risk from origin to finished product.
"Working with a broad cross section of industry
participants over the last 18 months, our team has developed a
deliverable cocoa futures contract that we believe will more
accurately reflect the characteristics and practices of the
physical cocoa market," said Jeffry
Kuijpers, Executive Director, Agricultural Commodities, CME
Group. "Our goal is to provide an enhanced hedging mechanism for
commercial firms that trade and process cocoa as well as those who
manufacture chocolate. As our deliverable contract is designed to
provide better conditions for convergence with the underlying
physical market, we're confident it can also offer a better pricing
basis for origins seeking to market their crop."
In addition to providing an enhanced delivery basis, a number of
other unique features have been built into CME Europe's new
Physically Delivered Cocoa futures contract to offer market
participants enhanced risk management capabilities. CME Europe will
operate a first-of-its-kind electronic depository to manage
warehouse warrants cost effectively. The contract will be priced
against bulk and bagged cocoa to better reflect the physical
market, where nearly 70 percent of European cocoa imports are
shipped in bulk. Additionally, grading practices will be based on
Federation of Cocoa Commerce Ltd (FCC) standards, bringing value
from grading results closer to that of the underlying physical
market.
The first listed month will be the July
2015 contract for both the physically and financially
settled cocoa futures contracts.
These contracts will be subject to the rules of CME Europe and
cleared via CME Clearing Europe, CME Group's European clearing
house. A complete list of products, members and product
specifications can be found
at http://www.cmegroup.com/europe.
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural commodities, metals, weather
and real estate. CME Group brings buyers and sellers together
through its CME Globex® electronic trading platform, its trading
facilities in New York and
Chicago, and through its
London-based CME Europe
derivatives exchange. CME Group also operates one of the
world's leading central counterparty clearing providers through CME
Clearing and CME Clearing Europe, which offer clearing and
settlement services across asset classes for exchange-traded
contracts and over-the-counter derivatives transactions.
These products and services ensure that businesses everywhere can
substantially mitigate counterparty credit risk.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME,
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Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the
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CME-G
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SOURCE CME Group