CME Plans to Offer Cocoa Contract to Compete With NYSE Liffe

Jun 09, 2014 1:45 pm ET

(Updates with prices in last paragraph.)

June 9 (Bloomberg) -- CME Group Inc. plans to start a European cocoa contract to compete with NYSE Liffe, said Tim Andriesen, the Chicago-based company’s managing director of agricultural commodities and alternative investments.

The contract would be listed on CME Europe in London and focus on physical cocoa movements into Europe, Andriesen said today in a discussion with media in London. The exchange plans to offer the contract later this year or early in 2015, subject to regulatory approval, he said.

NYSE Liffe, which was bought by Intercontinental Exchange Inc. in November, has tried to address concern that its contract prices don’t converge with the physical market. The bourse also reduced trading hours and set maximum delivery times from warehouses. Adaora Anunoby, a spokeswoman for ICE, declined to comment on CME’s plans.

Cocoa “is a market that we think has room for improvement,” Andriesen said. “With a lot of physically delivered contracts, it’s all about the delivery mechanisms, whether it’s warehousing, delivery mechanisms, timing. It’s a very challenging space. We’ve got 160-some years of experience doing it in the U.S. For the most part we think it works very effectively.”

Cocoa for September delivery traded at 1,944 pounds ($3,265) a metric ton today on NYSE Liffe, up 12 percent this year.