ChainCatcher, citing Bloomberg, reported that the U.S. Commodity Futures Trading Commission is considering whether to block an application from CME Group to launch an around-the-clock crude oil contract. The review centers on whether crude oil is an appropriate asset for a structure that would trade 24 hours a day, seven days a week.
CFTC Reviews 24/7 Trading for Crude Oil
A senior CFTC official said around-the-clock trading may not be suitable for crude oil because, during periods of geopolitical tension, it could intensify volatility that is already extreme. The comment shows that the regulator is still assessing how such extended trading hours would fit with the risk profile of crude oil futures.
CME announced last Thursday that it planned to introduce crude oil and gold futures contracts trading 24 hours a day, seven days a week. According to the report, the announcement came as a surprise to the CFTC. The new crude oil contract would be one-tenth the size of the existing Micro WTI futures contract and is planned for launch on August 30, pending regulatory review.
Crypto Perpetual Contract Debate Forms Part of the Context
One week before the crude oil contract plan was announced, CME’s chief executive had expressed “serious concerns” about the CFTC clearing the way for cryptocurrency perpetual contracts. The CFTC has said it will assess perpetual contract applications on a case-by-case basis and that certain assets may not be suitable for the product.
The review of CME’s proposed around-the-clock crude oil contract places trading hours, asset volatility and product suitability within the same regulatory discussion. Based on the information disclosed so far, CME has announced its 24/7 crude oil and gold futures plan, but the crude oil contract’s planned August 30 launch remains dependent on the outcome of regulatory review.