KCBT Has New Settlement Method for HRW

By CnAgri2012-08-03 19:43:23 Print

The board of directors of the Kansas City Board of Trade in a regularly scheduled board meeting approved plans to implement a new settlement methodology for HRW wheat futures that will incorporate both floor-based and electronic trading in a volume-weighted settlement price calculation. Pending CFTC approval, the change will be effective on August 20.

The settlement price of the lead contract month shall be determined by the weighted average method of the trades in the closing period executed both on the electronic trading system and in the trading pit, rounded to the nearest price tick.

Settlements for all other contract months will be based on spread price relationships, considering spread trades executed both on the electronic trading system and in the trading pit during the closing period, rounded to the nearest price tick. The lead contract settlement price serves as the initial spread relationship basing point for adjacent contract months, whose settlement can then be used in chronology to determine deferred month settlements.

The Kansas City Board of Trade is a for-profit corporation organized under the laws of Delaware. The KCBT, founded in 1856, is the world's largest futures market for hard red winter wheat.