On Friday, CME Group Inc. (CME) launched trading and clearing services for eight new petroleum products and nine natural gas liquids (NGL) futures contracts. While trading will be available on the New York trading floor, the clearing services will be available through CME ClearPort.
ClearPort is a set of flexible clearing services open to participants in over-the-counter (OTC) market to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes.?
Trading of the option contracts is scheduled to begin on Sept. 20 for trade on the next day. These contracts are listed with NYMEX and are subject to the rules and regulations of both NYMEX and CME.
The first listed month will be the October contract. The BALMO contracts will be listed for one month and the following month for 10 business days prior to the start of the contract month. All other contracts will be listed for 36 consecutive months.
The year-end futures contracts are generally most liquid. Therefore, market participants will benefit from the lesser time value of these instruments due to higher liquidity. These NGL and petroleum products will provide a set of complementary risk-management tools to the marketplace.
CME Group is the largest futures exchange in the world, offering the widest range of benchmark products covering all major asset classes, specifically futures products and options on futures. The broad product groups are futures and options based on interest rates, equity indexes, foreign exchange, commodities, energy & metals and also alternative investment products such as weather and real estate.
Although we remain optimistic about the continued growth prospects, especially with good progress on the integration of the recent acquisitions and the global expansion initiatives, relative valuation looks stretched and volumes may continue to be near current levels until the underlying markets stabilize. Therefore, we are maintaining our Hold recommendation on the shares.
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