The new contracts will be the first U.S. cash-settled futures and options for grains and oilseeds. The settlement indexes are based on roughly 1,500 country elevator bids and are calculated daily by Data Transmission Network (DTN), an Omaha-based electronic commerce and information services company. NCI and NSI futures and options will be the first products to trade on MGEXpress. The launch of MGEXpress is pending CFTC approval.
Kent Horsager, president and chief executive officer of MGEX, said these developments are a major milestone in the Exchange's 120-year history. "Electronic trading and cash-settled contracts will provide new opportunities for MGEX members and their customers," he said.
In February 2001, MGEX and DTN entered into a licensing agreement whereby MGEX would develop cash-settled futures contracts using DTN data. NCI and NSI futures and options will be the first products launched under this arrangement and will be traded exclusively on MGEXpress.
Darren Siekman, president of DTN Ag Companies, said, "MGEX is to be congratulated for taking such a progressive step that will provide risk management products to better serve agricultural businesses."
OM Technology, based in Stockholm, Sweden, is the technological expertise behind MGEXpress. OM is a leading provider of exchange technology to over 25 international exchanges and clearinghouses and also owns and operates exchanges in Stockholm, Calgary and London.
John Miller, chairman of the MGEX board of directors, said, "Our partnerships with DTN and OM are great assets for MGEX. The combination of innovative products trading on state-of-the-art technology will bring tremendous efficiencies to the risk management and trading processes of both hedgers and speculators."
NCI and NSI futures and options contracts will settle to a three-day average of the National Corn Index and National Soybean Index, respectively. DTN collects elevator bids daily for U.S. number two yellow corn and U.S. number one yellow soybeans and averages them to arrive at the NCI and NSI. The contracts will reflect country-origin pricing for corn and soybeans. Because there is no delivery alternative, futures and options contracts will expire simultaneously.
MGEX's market regulation department conducted an audit of DTN's index collection and reporting processes during the spring and summer of 2001. A Frequently Asked Questions (FAQ) sheet summarizing the finding of the audit may be found at www.mgex.com in both the corn and soybean products sections; additionally, contract specifications, a spreadsheet containing historical NCI and NSI values and other contract resources may be found in these sections.
The Minneapolis Grain Exchange, established in 1881, is the only futures market for hard red spring wheat, white wheat, durum wheat, cottonseed, Twin Cities on- and off-peak electricity, black tiger shrimp and white shrimp. For more information on the Exchange, visit www.mgex.com.
