This news is announced by CME Group Inc’s CEO, Craig Donohue to Reuters Future Face of Finance Summit on 2^nd March 2011. According to Craig Donohue, the company is looking at a market that has benefited from its relative proximity to Asia. Hence, London is a perfect market for futures and over-the-counter trade.

London has been better positioned geographically to take advantage of booming demand for commodities in Asia, while stricter regulation in the United States in the wake of the financial crisis has also encouraged some to trade elsewhere.

A move into the London commodities market could significantly raise the stakes for CME and ICE as they compete for market share.

“We have fairly significant ownership stakes in a number of countries like Malaysia and Dubai so we are also going to be looking, and I think London will be included in that, to think about more flexible arrangements for CME group on a going forward basis.” Donohue said.

Though it is a public news that CME had gained regulatory approval in December for a European clearinghouse in London that is set to launch later this year, no one knows what exactly the plans were.

One of the major impacts to NYMEX is, as the London-based ICE Exchange has captured a growing share of combined crude and product futures volume in recent years, it will not be surprised that this could be set to overtake NYMEX as the first oil trading hub in 2011.

Underscoring the challenge facing CME, its main rival for interest-rate futures, NYSE Euronext, also operates a London exchange, and Deutsche Boerse’s planned acquisition of NYSE would create a dominant futures business there.

Donohue said on Wednesday that regulators in the United States risked going too far and they did not know the full economic implications of plans to introduce position limits for commodities like crude oil.

“Global capital really does shift pretty easily,” Donohue said. “We’re pro-regulation … (but) we do run the risk we’ll see business shift away from the United States.”

Resource: Reuters

On 1 Oct 2010 (Friday), corn hits the lows of the day trading below the uptrend line. If prices rebound next week that means the trend remains up and new longs can be considered. It’s important to note that the market is becoming more volatile as prices near yearly highs. Even though the USDA report was slightly negative, it doesn’t elevate the bullish case.

Soybeans traded lower below the suspected neckline without forming the right shoulder. 1097.0 is the neckline support low and if it holds, a rebound shall develop next week and the right shoulder shall develop too, this could be a resumption of the uptrend.

On the other hand, the wheat market traded lower Friday with prices below the 50% level.

Now let’s have a look on the Softs.  The cocoa market had a very large down day on Thursday in what some consider a flash crash but prices recovered quickly, then traded lower again on Friday. This new volatility shows the importance for traders to include trading options buy using them as futures stops or as a standalone strategy because of being stopped out prematurely with regular stop placements.

After breaking out of its sideways channel in July, Dec. coffee remains in an uptrend. The coffee market is getting more volatile, you may remain long but keep an eye for a top to develop. A closing price below the trend line is the signal to close longs and consider shorts. Put option spreads and short futures with put protection.

March sugar traded slightly higher Friday after falling hard yesterday. A rebound higher from today could develop the right shoulder of the possible head and shoulders top.

The cotton market traded lower Friday with end of week profit taking and in sympathy with the grain markets. Uncertainty with crops and the fact that high prices are not reducing demand tells us that the long term up trend line should be solid support. In fact, a retracement back near the up trend line is almost a 50% retracement and would setup a longer term buying opportunity.

The January orange juice chart shows no trend at all, though the seasonal trend points higher through winter. However, there is a new #1 point in January OJ at 167.10

What is Futures Trading?

A futures contract is an agreement between two individuals or entities to deliver and to buy some important assets/commodities where the unit price, the payment, delivery date, and the quantity and quality of the asset/commodity ordered are clearly stated in the contract. Some of the important futures trading in the financial world are oil futures trading, gold futures trading and FOREX futures trading. The good thing of futures trading is that both parties are spared from uncertainty and market risk, futures saves them from the trouble of haggling just to get the needed commodity or the underlying asset.

The Hedgers

The buyer and the producer (called the hedgers) both have hedged their risk by having a futures contract: the buyer is secured that he will have his supplies after a certain period of time while the producer is sure that his assets will be disposed upon closure of the futures contracts. Domestic and international corporations, banks, insurance companies, mutual fund managers, and trading firms are the main hedgers in futures market.

In fact, futures contract is indeed a straight forward activity that involving a buyer and a seller. However, because of the present of the third party, namely speculators, more colors have been added in to the futures trading market.

The Speculators

These speculators have no direct participation in the delivery of the underlying asset or commodity, where their main purpose is try to make a profit by observing and calculating market moves and opening another contract called the “derivative contract”, offering another related product being traded. Speculators assume risk in anticipation of making a profit; in doing so, they add liquidity to the market.

As sellers always want the highest possible price while buyers want the lowest possible price, it is not easy to set a price that agreed by both hedgers. When speculators enter the marketplace, the number of ready buyers and sellers increases, and hedgers are no longer limited by the hedging needs of others.

What Is Options Trading?

Before we go any further on options trading, let’s understand what an option is. Option is defined by The Options Industry Council as “a contract to buy or sell a specific financial product officially known as the option’s underlying instrument or underlying interest.” What exactly is that means?

To put it into a layman term, option simply means you purchase the right to buy or to sell something at a specific price within a specific time frame. You are not buying or selling that product, you just buy “the right to buy” or “the right to sell” by paying a certain premium. It is vital for you to understand this fundamental so that you will not confuse in the coming study.