CME Group, the world's leading and most diverse derivatives marketplace, today announced it has completed its acquisition of the Kansas City Board of Trade (KCBT), the leading futures market for hard red winter (HRW) wheat.
The completion of the acquisition will provide both CME Group and KCBT customers with greater capital efficiencies, new trading opportunities and additional products to manage their global wheat price risk.
"We're pleased to complete this transaction, combining KCBT Hard Red Winter Wheat products with our deep and liquid CBOT Soft Red Winter Wheat futures and options markets," said CME Group Executive Chairman and President Terry Duffy. "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."
"The addition of KCBT to CME Group will provide significant value to the customers, shareholders and members, beginning on day one," said CME Group CEO Phupinder Gill. "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 KCBT and CBOT Wheat futures and options, while developing new and innovative products that will benefit customers of both varieties of wheat."
Beginning today, CME and CBOT members and KCBT permit holders will immediately benefit from the ability to trade each other's wheat futures and options products in a more cost-effective manner on the CME Globex electronic trading platform. Following the integration of clearing services, customers will benefit from cross-margining and other capital efficiencies.
Beginning Monday, December 10, customers will be able to take advantage of the implied spread between these two distinct wheat futures products. The implied inter-exchange KCBT-CBOT Wheat futures spread will be available for trading on CME Globex.
CME Group will begin integrating KCBT business operations and clearing services in order to achieve efficiencies for members, customers and shareholders. The timetable for integration incon includes:
Ongoing operation of the KCBT trading floor for at least six months;
Integration of clearing systems (specific timeline to be announced Q1 2013); and
Maintenance of a committee made up of KCBT market participants to advise on HRW wheat contract terms and conditions for at least three years.