The Kansas City Board of Trade has received approval from the Commodity Futures Trading Commission (CFTC) to clear over-the-counter wheat calendar swaps through the Kansas City Board of Trading Clearing Corporation.
July 1 has been designed as the launch day for wheat calendar swaps. Complete information can be found at Wheat Calendar Swaps
“The KCBT is pleased to have received CFTC approval to clear wheat calendar swaps,” said KCBT President and CEO Jeff Borchardt. “Clearing wheat swaps is a natural extension of the Kansas City Board of Trade’s current product offerings. Wheat calendar swaps provide the most straight-forward first step in clearing over-the-counter wheat products and a base from which to expand into other wheat-related swap products in the future as warranted.”
Only eligible swaps participants can participate in wheat calendar swaps. All FCM’s (including clearing, non-clearing and non-member) must execute a participation agreement that sets forth their obligations with respect to wheat calendar swaps. The participation agreement can be found at: FCM Agreement
For additional information, contact KCBT Vice President of Compliance Joe Ott at 800-821-5228 begin_of_the_skype_highlighting 800-821-5228 end_of_the_skype_highlighting.
The following are benefits of wheat calendar swaps:
- Transfers counter-party risk to a centralized clearing entity
- Reduces the potential impact of settlement default risk by marking to market on a daily basis
- Provides market users with the benefit of portfolio margining of over-the-counter and exchange-traded products within an account
An over-the-counter wheat calendar swap is a privately negotiated contract between a buyer and seller based on the underlying KCBT hard red winter wheat futures contract. These swaps counterparties will then be able to submit such contracts to the KCBT Clearing Corporation for clearing.
