ICE Said to Propose Changes to London Robusta Coffee Contract

1470656591_GettyImages-104315084 copy

A worker stacks bags of unroasted robusta coffee beans in the warehouse at Banaran Coffee Plantation in Bawen, Semarang regency, in Central Java, Indonesia.

Photographer: Dimas Ardian/Bloomberg
  • Traders bringing beans to ICE would pay for warehouse removal
  • Rules aim to prevent deals favoring some traders over others

Intercontinental Exchange Inc. has proposed changes to its robusta coffee contract to provide a level playing field for all buyers and sellers, according to people familiar with the matter.

Under the plan, traders bringing coffee from producing countries to be delivered against ICE’s London futures would pay the fee for removing the beans from bourse-approved warehouses, said the people, who asked not to be identified because the talks are private. At present, buyers are responsible for paying load-out charges.

The new rules would discourage traders and warehouse owners from striking deals that favor some companies over others and provide buyers and sellers with equal opportunities no matter their size or relationship with the warehouse keeper, the people said.

Warehouse keepers usually provide incentives for sellers to bring coffee to their facilities that will be sold through the exchange and give better deals to their biggest customers. The costs are made up later, when depots charge the buyer higher fees to either keep or remove the beans from storage.

The exchange is also considering proposals to change who pays rent for the time it takes to load-out the beans, which is a maximum of two months, the people said. At the moment, buyers pay that fee.

According to exchange rules, changes can only be applied at the earliest to the first contract with no open interest, which at the moment is for 2018 delivery.

Adaora Anunoby, a spokeswoman for ICE in London, declined to comment.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE