The US Commodity Futures Trading Commission (CFTC) has halted CME Group's plan to list a new 24/7 crude oil futures contract, citing the need for a thorough review. The contract would have allowed continuous trading of WTI crude futures.
The CFTC's decision to halt the listing of a 24/7 crude oil futures contract highlights regulatory scrutiny over continuous trading in energy markets. It suggests potential concerns about market volatility and the need for comprehensive review before introducing such novel products, impacting how energy futures are traded and priced.
The US Commodity Futures Trading Commission (CFTC) has intervened to prevent CME Group from listing a novel 24/7 crude oil futures contract, citing regulatory concerns. CME Group had sought to use a fast-tracked self-certification process to list the contract as early as Friday, which would have allowed continuous trading of WTI crude futures.
The CFTC announced on Thursday it would stay the listing until a thorough review could be completed to ensure compliance with federal law and its own regulations. This action comes after the CFTC opened a public comment period last month on the concept of around-the-clock energy trading, which remains ongoing.
CFTC chairman Michael Selig stated that CME's decision to proceed without fully addressing critical issues was inappropriate. He encouraged exchanges to collaborate with agency staff on potential legal issues before introducing new contracts. The CFTC rarely intervenes in the self-certification process, which typically allows exchanges to list products within one business day if no action is taken by the agency.
CME Group had announced in August its intention to launch the 24/7 WTI crude futures contract, equivalent to 10 barrels of crude, on August 30. Such a contract would offer traders the ability to transact outside of traditional market hours, potentially addressing market movements that occur over weekends, such as during the ongoing US-Iran war.
In addition to self-certification, CME Group also pursued a voluntary review process, which allows the CFTC up to 90 days to assess products raising novel or complex issues. CME Group stated it works with the commission on new product reviews. The CFTC's decision followed at least nine meetings between CFTC officials and oil industry executives and commodity trading firms who had expressed concerns regarding 24/7 energy trading. The commission is evaluating whether such continuous trading could lead to increased volatility during less liquid off-hours, potentially causing collateral demands or forced liquidations.
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