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NGFA warns against 24/7 trading and perpetual agricultural energy futures
The group told the CFTC that continuous 24/7 trading and perpetual contract proposals could undermine hedgers ability to manage risk, citing mismatch with cash market hours.
The National Grain and Feed Association urged federal regulators to proceed cautiously on proposed changes to agricultural energy futures market structure, warning that moving to 24/7 trading and adding perpetual futures could raise risks for commercial hedgers. In comments filed Aug. 26 with the Commodity Futures Trading Commission, the NGFA said innovation in derivatives can be beneficial, but regulators should not allow structural changes to come at the expense of effective risk management and market integrity. The association also argued that any adjustments should preserve the ability of commercial firms to hedge price risk. NGFA President and CEO Mike Seyfert said NGFA members rely on physically delivered futures contracts to manage risk in grain, oilseed and agricultural energy markets. He pointed to the current structure as supporting convergence between cash and futures prices and recommended no changes to trading hours or contract design to protect those benefits. The NGFA said expanding agricultural energy futures to a continuous 24/7 schedule could create long-term risks and added costs because underlying cash markets do not trade around the clock. It also warned that different trading hours across grain, oilseed and agricultural energy contracts could complicate hedging strategies, reduce liquidity during traditional sessions, increase volatility, and require additional staffing while markets are open. The association also opposed perpetual contracts for agricultural energy commodities, saying physically delivered contracts remain the most effective way to ensure cash and futures price convergence.