ICE Futures Europe to Start Cocoa Contract Priced in Euros

ICE Futures Europe will start a cocoa futures contract priced in euros to run alongside its product that’s denominated in pounds.

The new futures and options are expected to be introduced in April, Atlanta-based Intercontinental Exchange Inc. said in an e-mailed statement today. They will first mature in December, subject to regulatory processes, it said.

CME Group Inc., the world’s largest futures market operator, said in June that it plans to start a cocoa contract in Europe to compete with NYSE Liffe. ICE Futures Europe, owner of the Brent crude contract, assumed control of Liffe’s soft commodities derivatives after the acquisition of NYSE Euronext. Fleur Binyon, a spokeswoman for the Chicago-based exchange in London, declined to give further details on those plans.

“Based on an extensive market consultation, there is meaningful market demand due to a commercial need for euro-denominated cocoa contracts,” David Peniket, president and chief operating officer of ICE Futures Europe, said in the statement.

The physical terms of ICE’s new euro contract will be identical to the existing product priced in pounds, it said. The transfer of open interest between the two contracts will take place through a “block trading facility,” it said.

Open interest on the December contract totals 17,051 lots, while 16,663 contracts expiring in March 2016 are currently changing hands, data compiled by Bloomberg show.

“Some companies out there feel that there are significant benefits because they buy their cocoa or market it in euros, others are indifferent,” Jonathan Parkman, co-head of agriculture at brokerage Marex Spectron Group in London, said by today phone. “The market has got used to a specific cocoa contract, with its history, and the move to another currency denomination means there are logistic issues to overcome.”

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