CME Group and the National Cattlemen’s Beef Association (NCBA) have made several announcements regarding the design of a number of steps that intend to help further enhance US livestock markets, which have become increasingly volatile.

“Nothing is more important to us than the integrity of our markets, which help farmers and ranchers to discover prices and transfer risk,” said Tim Andriesen, CME Group Managing Director of Agricultural Products. “We believe these actions will further enhance our cattle markets for all participants.”

The first major change relates to CME livestock futures and options trading hours, which will be reduced to align with the period of greatest liquidity in these markets, effective Monday, February 29. While the daily settlement period and procedures for CME livestock contracts will remain unchanged, the proposed trading hours for Live Cattle, Feeder Cattle and Lean Hog futures and options will be as follows:

CME Globex futures and options – 8:30 a.m. to 1:05 p.m. CT Monday to Friday
Open outcry options – 8:30 a.m. to 1:02 p.m. CT Monday to Friday

CME and NCBA have also formed a working group to discuss other possible enhancements to its cattle markets, including, circuit breakers and other measures to further heighten market quality. The decision to create a joint effort. comes after hearing concerns about the market from membership nationwide.

“While CME has announced certain measures, the effect of automated trading remains unresolved,” said Colin Woodall, NCBA senior vice president of government affairs. “The market needs liquidity, but it must also serve the function of a meaningful risk management tool. If the playing field is not leveled between speculators, commercial traders, and producers; then our industry loses a critical marketing tool. Before any other changes are proposed, we expect CME to utilize the working group to address the actions we have already suggested.”

CME Group will also be conducting a public review with cattle customers during the month of February to study if a discount is warranted at its Worthing delivery point for Live Cattle futures. Any potential changes will be announced during Q1 of 2016.

The letter the NCBA sent to CME Group can be found here.