Are Changes Needed for the N.Y. Futures Contract?

On June 6, the International Cotton Advisory Committee held a seminar in Washington, DC to discuss the possible need for changes to the New York cotton futures contract. The feature presentation was given by Joe O’Neill, chairman of the Intercontinental Exchange’s (ICE) Cotton Committee as well as former president of the New York Cotton Exchange and senior vice president of the New York Board of Trade.

During his presentation, O’Neill traced the recent history of changes in characteristics of traders using commodity futures in the United States and the impacts of the shift from floor trading to electronic trading. He also discussed the reasons for differences in cotton contract performance during the last five years compared with prior years. He noted that today, commercial traders still are very active participants in the market, but that the individual speculators have been replaced by hedge funds, SWAP traders and high-frequency traders. He added that prior to March 2008, floor traders were sources of market intelligence that can no longer be recovered through electronic trading.

O’Neill mentioned some of the factors that could affect trading in a world cotton futures contract if such a contract were created. To see what those factors are and view the rest of his PowerPoint presentation, please click here.