NYSE Liffe, the derivatives arm of NYSE Euronext, will double the amount of white, or refined, sugar, buyers can take delivery of starting with the futures for delivery in May, the exchange said in a notice on its website.
A single buyer will be able to take delivery of up to 10,000 contracts, or 500,000 tons, of white sugar under the new rules, according to the notice dated yesterday and posted on the bourse’s website today. That’s double the previous limit of 5,000 lots. NYSE Liffe may give permission for a single buyer to take delivery of up to 15,000 contracts in certain cases, which include a physical commitment to deliver the commodity obtained via the exchange to a client. The previous exemption allowed buyers to take delivery up to 10,000 contracts.
“The white sugar delivery limit level, combined with a lack of optionality in respect of exemptions, may have acted to unnecessarily constrain legitimate commercial business, particularly because of the delivery intentions expressed by certain market participants in the December 2012 delivery month,” NYSE Liffe said in the notice.
White sugar delivered against the expired December futures contracts was 8,496 lots, or 424,800 tons, the biggest in five years, data from the bourse showed. While ED&F Man Sugar Ltd. received 215,000 tons and Sucres et Denrees SA took 209,800 tons, Cargill Inc. delivered 250,000 tons and Louis Dreyfus Commodities Suisse SA another 174,800 tons.
Delivery limits will remain 7,500 lots, or 75,000 tons, for cocoa and robusta coffee and 2,000 contracts, or 200,000 tons, for feed wheat, according to the exchange. Members’ positions will be scrutinized by the exchange at any time regardless of their size, NYSE Liffe said. That’s “particularly pertinent” for coffee and cocoa due to “historically low levels” of certified stockpiles, it said.
“An inevitable consequence of these lower certified stock levels is that a market participant’s certified stock holding has a greater potential to represent a significant percentage of the overall level of certified stocks,” Liffe said. “The exchange has a regulatory obligation to maintain a fair and orderly market, and, where a dominant position-holder exists, the management of that position will be closely monitored.”
That may mean the bourse will take actions that include asking a dominant-position holder to reduce the size of its position, according to the notice.