The United States Commodity Futures Trading Commission (CFTC) was reported to be prepared to prevent CME from introducing all-weather crude oil contracts through a rapid self-certification process. The regulators are concerned that the energy market is not yet ready to take on more derivatives traded in non-traditional time periods, especially on weekends and old market breaks.
Fast program or stopped.
According to the British Financial Times, CHB has submitted applications for self-certification of new products to regulators on Wednesday. In this process, the CFTC has only one day before the contract is listed.
According to the source, the CTC plans to block the application. At the same time, another regular application for the same product has been submitted by the firm, which requires 45 days of review and is still under consideration by the regulator.
The main concern at the regulatory level is that the rapid release of such 24-hour mini-contracts may soon pave the way for more and larger derivatives. The market liquidity and price discovery mechanisms may not be adapted in a timely manner once a large number of transactions have been taken over by the time of the break.
New contract targeting weekend risk management
In June of this year, Zhi's firm indicated that it plans to introduce a 10-barrel futures contract to link WTI crude oil and to provide round-the-clock trading. This product threshold is lower than the standard 1,000 barrels of crude oil futures and is mainly directed at traders who wish to adjust their positions in a timely manner in the event of sudden news.
Against the backdrop of tension and increased oil price volatility in the United States and the Islamic Republic of Iran, the market ' s interest in more flexible trading instruments has been noticeably on the rise. The closure of the traditional crude oil market on weekends has also exposed some investors to risk in non-trading times.
- New product size of 10 barrels
- Standard WTI crude oil futures of 1,000 barrels
- General approval process review period 45 days
The demand for the weekend is rising.
It was reported that Hyperliquid, based in Singapore, had provided a contract for the renewal of the leverage crude oil. During the break-off in the traditional crude oil market, such products attracted a large number of traders, reflecting the real demand for price risk management on weekends.
According to some energy marketers, government actions, extreme weather and industrial accidents can occur on weekends, and market participants need to deal immediately when news comes, rather than wait until traditional markets are reopened. Oneyx Capital Group, a crude oil analyst, Jorge Montepeque, stated that the round-the-clock market was relevant, but that the key remained whether sufficient liquidity could be created.
For its part, the CHB indicated that smaller-scale products such as 10 barrels of crude oil contracts were usually subject to a self-certification process. At the request of the CTC, the exchange has also synchronized the submission of more time-consuming regular applications.
CFTC's recent intensive exposure to energy companies
In recent weeks, the Chairman of the CFTC, Michael Selig, has met with a number of energy company executives, including Shell, Vido, British Petroleum and ExxonMobil. Prior to the formal release of the regulatory layer, it is clear that it is still assessing whether the market can operate steadily after the expansion of energy derivatives to round-the-clock trading.