CME Group Drops 24-Hour Crude Futures Plan After Industry Backlash

CME Group has scrapped plans to launch a 24-hour crude oil futures contract after opposition from key industry participants proved decisive.

Bloomberg reported on October 2 that CME Group Chief Executive Officer Terry Duffy said in a statement the company had concluded, after extensive discussions with industry participants, that key stakeholders were concerned introducing 24-hour trading to the energy market without sufficient prior review could produce unintended consequences and add risk.

The proposed contract was designed to be one-tenth the size of the existing Micro WTI futures contract. After the plan became public, the U.S. Commodity Futures Trading Commission began reviewing the market impact of round-the-clock trading. Traders and other market participants raised concerns that thin weekend liquidity could distort prices for West Texas Intermediate, a global crude benchmark.

The withdrawal also marks a retreat by CME in its competition with offshore exchanges. Trading in 24-hour crude-linked products on offshore venues has surged since the outbreak of the Iran war. Duffy said CME had sought to offer a safer, more transparent alternative under CFTC oversight and within U.S. jurisdiction.

The American Petroleum Institute said in a comment letter submitted to the CFTC that continuous trading would strain weekend staffing, complicate commercial hedging and trigger margin and collateral requirements outside regular trading hours. BP expressed the same concerns in a public comment letter.