Black Sea Financially Settled (Platts) Sunflower Oil futures
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Black Sea Financially Settled (Platts) Sunflower Oil futures
Background
• There was no viable price risk management tool for the global sunflower oil trade
• Market participants requested a solution to manage price and counterparty risk
• Ukraine world’s largest sunflower oil exporter, Russia second
• Platts provides Ukrainian Sunflower Oil FOB daily cash price assessment
800,00 32
750,00 31
700,00 30
US cents/pounds
650,00 29
USD/MT
600,00 28
550,00 27
500,00 26
450,00 25
400,00 24
11.янв.19 11.фев.19 11.мар.19 11.апр.19 11.май.19 11.июн.19 11.июл.19
Platts Sunoil FOB Ukraine Palmoil futures front month Soyoil futures front month (RHS)
Source: CME Group, S&P Global Platts
© 2019 CME Group. All rights reservedBlack Sea Sunflower Oil futures (BSF) highlights
• First trading day was 26 August 2019
• Available alongside Black Sea Wheat (Platts) and Black Sea Corn (Platts) contracts
• These have been well adopted by physical market participants
• Over 320k lots traded since launch (16 million tonnes)
• Compliments other CBOT edible oil benchmark contracts:
• US physically delivered soyoil
• Cash-settled Malaysian crude palmoil
© 2019 CME Group. All rights reservedBlack Sea Sunflower Oil futures (BSF) overview
• Cash settled using Platts Black Sea sunflower oil cash assessments
• Platts assessments:
• Ukrainian raw sunflower oil
• FOB Chornomorsk 3000 mt parcels
• loading one or two calendar months forward
• First listed month available to trade November 19, further 11 months available
• 25 tonne contracts, in US$ per metric tonne
• Settlement period: 6th calendar day of the month two months prior to the listed month
to 15th calendar day of the month prior to the listed month
• Settlement prices provided on a daily basis 12 months out
• Available to trade on screen (Globex) and as blocks via Clearport (min. 5 lots)
• Counterparty risk managed through CME Clearing
© 2019 CME Group. All rights reservedBSF Specifications
Contract Size 25 Metric Tonnes
Price Quotation US Dollars and Cents per Metric Tonne
Tick Size (Minimum Fluctuation) $0.50 per metric tonne (US$12.50 per contract)
ClearPort (Block) Trading Hours Sunday - Friday 5:00 p.m. - 4:00 p.m. Chicago Time/CT with a 60-minute break each
day beginning at 4:00 p.m. CT
Settlement time 6pm London time
Listed Contracts Months 12 months listed, starting with November 19
Settlement Method Financially Settled
Final Settlement Price The Final Settlement price for each listed month is equal to the arithmetic average of
the Sunflower Oil Black Sea FOB Ukraine price assessments published by Platts for each
day that is determined during the Settlement Period. The Settlement Period for a
specified listed month is the period that starts on, and includes, the 16th calendar day
of the month that is two months prior to the contract month, and ends on, and
includes the 15th calendar day of the month prior to the contract month.
Termination of Trading Trading shall cease on the 15th calendar day of the month prior to the listed month,
subject to this being a business day which is also a Platts publication date for the price
assessment
Block minimum 5 lots
© 2019 CME Group. All rights reservedKey features of Clearing
OTC Market Without a OTC Market With a
Central Clearing Counterparty Central Clearing Counterparty
Buyer Seller Buyer Seller
Multiple
Seller Buyer CME Seller
Buyer Bilateral
Agreements Clearing
Seller Buyer Seller
Buyer
• Buyers and sellers consummate deals on • Buyers and sellers execute trades with
their own each other
• Sellers must accept each buyer’s credit • Buyers and sellers submit trade to CME
• Buyers must accept each seller’s credit for clearing
• Pricing is differentiated by quality of • Buyer and seller are guaranteed
counterparty performance by CME Clearing
• Buyer and seller have to negotiate to • Buyer and seller no longer have credit
close out a trade exposure to one another
• Parties close out transactions with any
party in the marketplace
© 2019 CME Group. All rights reservedDaily and Final Settlements
• Daily settlement prices for each listed month are established by CME Group
• These are based on price curves received from the brokers and actual trades
• Settlement prices are published daily latest 4pm Chicago time (typically 2pm)
• Final settlement price determined after listed month closes (post last trading day)
• Final settlement price is value at which remaining open positions are ‘cashed out’
• Final settlement price for each listed month is the arithmetic average of the price
assessments published by Platts during the Settlement Period
• The Settlement Period starts the 16th calendar day of the month that is two months
prior to the listed month to the 15th calendar day of the month prior
© 2019 CME Group. All rights reservedMargining and fees
• Initial Margins (deposit) has to be provided to initiate every futures trade
• Required from both buyer and seller
• Initial Margins for BSF as of 1 September: $xx per lot of 25 tonnes (3% of contract
value)
• Additional (variation) margin called when funds fall below initial level
• Margins are returned when positions are closed
• CME Group trading fees for non-members: $2.03 per lot of 25 tonnes (8 cents per
tonne) as a block, and $1.03 per lot on screen
© 2019 CME Group. All rights reservedAccessing BSF to trade
• Open/have a clearing account with a Clearer/firm with Clearing access (an FCM)
• Firms can trade BSF either:
1. on screen (Globex). This can be done via your FCM by phone or via a front end
provided by the FCM.
2. as a block on Clearport via a Clearport broker. This will additionally require setting-
up on Clearport
© 2019 CME Group. All rights reservedGetting registered on ClearPort
• To trade blocks, a firm should set-up on ClearPort and choose the brokers to work with
• The first step is to register on ClearPort:
• Complete firm registration:
http://www.cmegroup.com/info_forms/registration/clearPortEula.html
• Complete the user (trader/verification officer) registration to obtain Login IDs:
https://login.cmegroup.com/sso/register/
• Once ClearPort registration completed, the firm requests their Clearer to:
• Enable the account for BSF
• Permission any broker that the firm wishes to enter block trades on their behalf
© 2019 CME Group. All rights reservedBrokers negotiating block futures
• As with CME Black Sea Wheat and Corn, Sunflower Oil block futures are privately
negotiated by broking firms and booked into ClearPort
• In essence, brokers call around to find both sides of the futures trade and then executes
the futures in ClearPort
• Eight firms currently providing this service. Most broking Black Sea Wheat and Corn
• SCB Brokers
• TFS Derivatives
• INTL FCStone
• McDonald Pelz
• RJO’ Brien
• Venture Commodities
• Mariana UFP
• HPC SA
• Contact details at www.cmegroup/blacksea
© 2019 CME Group. All rights reservedSummary – key features of BSF
• Only Sunflower Oil futures contract available to trade
• Effective price risk management for Black Sea Sunflower Oil cash markets
• No physical delivery – cash settled using Platts assessments
• Physical booked can be hedged up to 12 months out
• Price settlements provided by CME Group on a daily basis 12 months out
• Numerous brokers providing liquidity to the market
• Clearing removes counterparty risk and widens number of counterparties
• Arbitrage opportunities vs other CBOT edible oil contracts
© 2019 CME Group. All rights reservedFurther information
• Contract details available at www.cmegroup.com/blacksea
• Dedicated website: www.cmegroup.com/blacksea also provides details on:
• CME Clearport
• Block Trading guide
• Margins
• Platts pricing methodology
• Contract rules and specifications
• Settlement prices and Open Interest available at:
http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/black-sea-
sunfloweroil-financially-settled-platts_quotes_settlements_futures.html
• Live futures and options trades: https://www.cmegroup.com/tools-
information/quikstrike/block-trade-browser.html
• Any queries, contact: blacksea@cmegroup.com
© 2019 CME Group. All rights reservedDisclaimer Helping the World Advance: CME Group is comprised of four designated contract markets (DCMs), the Chicago Mercantile Exchange Inc (“CME”), the Chicago Board of Trade, Inc. (“CBOT”), the New York Mercantile Exchange, Inc. (“NYMEX”), and the Commodity Exchange, Inc. (“COMEX”). The Clearing Division of CME is a derivatives clearing organization (“DCO”) for CME Group’s DCMs. Exchange traded derivatives and cleared over-the-counter (“OTC”) derivatives are not suitable for all investors and involve the risk of loss. Exchange traded and OTC derivatives are leveraged instruments and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money initially deposited. This communication does not (within the meaning of any applicable legislation) constitute a Prospectus or a public offering of securities; nor is it a recommendation to buy, sell or retain any specific investment or service. The content in this communication has been compiled by CME Group for general purposes only and is not intended to provide, and should not be construed as, advice. Although every attempt has been made to ensure the accuracy of the information within this communication as of the date of publication, CME Group assumes no responsibility for any errors or omissions and will not update it. Additionally, all examples and information in this communication are used for explanation purposes only and should not be considered investment advice or the results of actual market experience. All matters pertaining to rules and specifications herein are made subject to and superseded by official CME, CBOT, NYMEX and COMEX rulebooks. Current rules should be consulted in all cases including matters relevant to contract specifications. CME Group does not represent that any material or information contained in this communication is appropriate for use or permitted in any jurisdiction or country where such use or distribution would be contrary to any applicable law or regulation. In any jurisdiction where CME Group is not authorized to do business or where such distribution would be contrary to the local laws and regulations, this communication has not been reviewed or approved by any regulatory authority and access shall be at the liability of the user. CME Group, the Globe Logo, CME, Globex, E-Mini, CME Direct, CME DataMine and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. Copyright © 2019 CME Group Inc. All rights reserved. Mailing Address: 20 South Wacker Drive, Chicago, Illinois 60606 © 2019 CME Group. All rights reserved
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