By SARAH KENT
CME Group on Monday launched a new Brent crude futures and
options contract in a bid to challenge IntercontinentalExchange
Inc.'s (ICE) dominance in the market.
However, analysts said that CME was unlikely to seriously
dent ICE's hold on the Brent market, even if it initially
attracted more interest because of its earlier start date.
The first tradable month on CME's Brent 25-day contract will be
February 2012, while the first month for ICE's Brent NX
contract is December 2012.
"On the new contract at least they could start with a little
more liquidity than in the ICE contract," said Olivier Jakob,
managing director of Swiss consultancy Petromatrix.
"But I still think it's always the same when you launch a
new futures contract. Liquidity is in the old contract and it
takes a while to move to the new one," he added.
The ICE's decision to have the first trading month of its
new contract a year out followed a period of consultation with
customers, the exchange said.
"ICE Futures Europe believes that the end of 2012 is the
earliest that the Brent market could change to a 25-day basis
expiry calendar," a spokeswoman for the ICE said. "This is
because it is important to ensure a full year's notice for
Brent market participants, including those in the swaps (OTC)
In the week since ICE launched its Brent NX contract, trade
has been very limited, traders said. A spokesman for CME said
that "a couple" of trades had been completed on the CME 25-day
The move to new contracts by CME and ICE come ahead of
planned changes to the way Brent is assessed in the physical
Brent is a closely watched global benchmark for oil prices,
but over the years declining production volumes in the North
Sea oil fields where it is found have caused concerns over
Now Platts, the McGraw Hill Co. (MHP)-owned company that
calculates the price of Brent on the physical market, intends
to extend the period over which it assesses the oil price to 16
days from the current 12 to increase liquidity in the
The new contracts from the ICE and CME have different expiry
dates from the exchanges' longer-standing Brent contracts and
are intended to allign the futures market with the time-frame
over which the physical prices is assessed.
Dow Jones Newswires