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The Kansas City Board of Trade has filed with the Commodity Futures Trading Commission (CFTC) for approval to be able to clear over-the-counter wheat calendar swaps.
?Clearing wheat swaps would be a natural extension of the Kansas City Board of Trade?s current product offerings,? said KCBT President and CEO Jeff Borchardt. ?Wheat calendar swaps provide the most straight-forward first step in clearing over-the-counter wheat products. We could file to clear more wheat over-the-counter products as warranted.?
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 would be a privately negotiated contract between a buyer and seller based on the underlying KCBT hard red winter wheat futures contract. These swaps counterparties would then be able to submit such contracts to the KCBT Clearing Corporation for clearing.
Today marks the first day of the 30-day CFTC public comment period.
The KCBT, founded in 1856, is Kansas City?s oldest business and the world's largest futures market for hard red winter wheat. Daily quotes, market commentary, historical data and charting services are available on our website at www.kcbt.com.
