CME Group has formally shelved plans to launch a 24/7 crude oil futures contract, stepping back from a proposal that would have allowed trading seven days a week, around the clock. The contract had been designed at one-tenth the size of the exchange’s existing Micro West Texas Intermediate, or Micro WTI, futures product, as CME looked to answer competition from similar contracts listed on offshore trading platforms.
The plan drew scrutiny from the U.S. Commodity Futures Trading Commission and strong opposition from energy industry participants and traders. Market participants said thin weekend liquidity could distort prices and affect the pricing mechanism tied to one of the world’s key crude benchmarks. Industry representatives also warned that continuous trading would add staffing pressure, complicate commercial hedging, and raise the risk of margin calls outside standard business hours.
CME says deeper assessment is needed before moving ahead
CME’s chief executive said pushing forward without a more thorough review could introduce unintended risks into the market.
Under the original design, the new contract would have been one-tenth the size of the current Micro WTI crude oil futures contract. CME’s goal was to lower the barrier to entry. Traders and institutional investors, however, raised broad concerns about weekend liquidity. In periods of relatively light trading, even a small number of orders could trigger unusual price swings and interfere with price discovery in West Texas Intermediate, or WTI, which is treated as one of the global benchmarks for energy pricing.
CFTC review complicates CME’s effort to compete with offshore venues
Demand for 24/7 oil products on offshore platforms that are not subject to the same level of regulation rose sharply after the outbreak of Iran-related geopolitical conflict. CME had planned to offer a safer and more transparent contract within U.S. jurisdiction and under the CFTC’s regulatory framework, positioning it against offshore rivals.
That effort stalled after the CFTC opened a targeted review into the possible systemic effects of round-the-clock trading. The regulator is assessing whether a larger weekend market could materially disrupt the normal functioning of the broader crude oil market.
API and BP Plc among those expressing reservations
According to Bloomberg, the American Petroleum Institute, or API, and BP Plc were among the major industry players that expressed reservations to regulators.
Those firms argued that uninterrupted trading would put pressure on weekend staffing and make real-world commercial hedging much harder to manage. They also pointed to the risk that price moves outside traditional business hours could trigger margin calls or collateral demands, increasing liquidity risk for market participants.