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ICE to Consider Longer Trading Hours for Raw-Sugar Futures

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Dec. 13 (Bloomberg) -- ICE Futures U.S. plans to consider starting trading earlier for raw-sugar futures after a committee voted to approve the move.

The proposal to begin trading at 2:30 a.m. New York time during daylight savings time and 1:30 a.m. the rest of the year was approved 14-5 by the committee, according to an ICE e-mail dated yesterday obtained by Bloomberg News. The recommendation will be reviewed by the ICE board this week. Trading for the sugar no. 11 contract, a global benchmark, currently starts at 3:30 a.m. and runs until 2 p.m.

The exchange wants to draw more revenue from Asia, said Frank Jenkins, the president of Jenkins Sugar Group Inc. China may become the largest raw-sugar importer in the 12 months ending Sept. 30, Czarnikow Group Ltd. said last month.

“What they have in mind is to pick up Far East volume, especially from China,” Jenkins said in a telephone interview from Wilton, Connecticut. “People will have to worry more hours. Liquidity is likely to increase.”

ICE Futures is part of IntercontinentalExchange Inc., based in Atlanta. The company’s electronic exchanges also offer energy contracts and futures in coffee, cocoa, cotton and orange juice. Sugar also trades on China’s Zhengzhou Commodity Exchange and NYSE Liffe in London.

‘Arbitrage’ Trades

The new hours would overlap with sugar trading in China for 30 minutes, enabling some traders to bet on price differences between the markets, Michael McDougall, a senior vice president at New York-based Newedge Group, said today in a report.

The move would “allow traders to arbitrage the two markets, though the interested parties are only the trade that actually trades physical sugar in China,” McDougall said.

ICE may consider extending hours to include the entire session in China, which starts at 10 p.m. New York time, “if the experiment works,” McDougall said.

Lee Underwood, an ICE spokesman, declined to comment.

Extending sugar hours “has significant implications for all market participants,” Tim Barry, an ICE vice president of product development, said in the e-mail. The committee’s approval came “on the basis of what is in the best interest of the contract versus more narrow concerns about the potential effect of an earlier open time on individual circumstances,” he said.

Sugar futures for March delivery fell 0.2 percent to 23.25 cents a pound at 11:12 a.m. on ICE. Before today, the price dropped 27 percent this year.

CME Group Inc. is the largest U.S. futures exchange, followed by IntercontinentalExchange. ICE also offers trading in sugar no. 16 for U.S. supplies.

To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net; Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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