CME Group completes acquisition of K.C.B.T.
Dec. 3, 2012
by Jay Sjerven
KANSAS CITY — The CME Group, the world’s leading derivatives marketplace, today announced it has completed its acquisition of the Kansas City Board of Trade, the leading futures market for hard red winter wheat.
“We’re pleased to complete this transaction, combining K.C.B.T. hard red winter wheat products with our deep and liquid C.B.O.T. soft red winter wheat futures and options markets,” said Terry Duffy, executive chairman and president of the CME Group. “The integration of these two global wheat benchmarks will provide new trading opportunities to commercial grain market participants, wheat traders and customers who continue to rely on these tools to manage their price risk.”
Phupinder Gill, chief executive officer of the CME Group, said, “The addition of K.C.B.T. to CME Group will provide significant value to the customers, shareholders and members of both exchanges, beginning on day one. Starting today, we’re integrating hard red winter wheat futures and options into our suite of already deep and liquid grain and oilseed products. Moving forward, we’ll work with customers to grow existing K.C.B.T. and C.B.O.T. wheat futures and options, while developing new and innovative products that will benefit customers of both varieties of wheat.”
Effective immediately, C.M.E. and C.B.O.T. members and K.C.B.T. permit holders will be able to trade each other’s wheat futures and options products on the CME Globex electronic trading platform. Following the integration of clearing services, customers will benefit from cross-margining and other capital efficiencies, Mr. Gill said.
Beginning Monday, Dec. 10, customers will be able to take advantage of the implied spread between these two distinct wheat futures products. The implied inter-exchange K.C.B.T.-C.B.O.T. wheat futures spread will be available for trading on CME Globex.
CME Group will begin integrating K.C.B.T. business operations and clearing services in order to achieve efficiencies for members, customers and shareholders. The timetable for integration includes: ongoing operation of the K.C.B.T. trading floor for at least six months; integration of clearing systems (specific timeline to be announced in the first quarter of 2013); and maintenance of a committee made up of K.C.B.T. market participants to advise on hard red winter wheat contract terms and conditions for at least three years.