BM&FBOVESPA Starts Trading Mini Crude Oil Derivatives Contract

21/06/2013

BM&FBOVESPA launches a new cash-settled mini Crude Oil derivatives contract on June 21, based on the settlement price of CME Group’s NYMEX Light Sweet Crude Oil (WTI) futures contract.

The new contract is authorized for trading as of the August 2013 contract month, from 9:00 a.m. to 4:00 p.m. under the WTI ticker. The size of each futures contract is equivalent to 10% of the original contract, representing 100 barrels of crude oil and quoted in United States Dollars. The settlement prices of the cash-settled mini Crude Oil futures contract will be calculated from the settlement prices that have their methodology available here.

The launch is part of an agreement with CME Group to promote the cross-listing of futures contracts designed to meet the needs of local market participants. The new contract will allow local lifters, refiners, fuel distributors, importers, exporters, suppliers of oil-based products and other participants to execute hedging strategies that mitigate against price risk in the energy markets.

New derivatives contracts to have market makers
A Market Maker program will be launched with this contract to promote liquidity from the start of trading. Up to three financial institutions will be selected to operate as market maker (including foreign institutions) via a competitive bidding process. The interested institutions must send their proposals to BM&FBOVESPA by April 19. The winners will be announced as of June 07.

Energy commodities portfolio
The BM&FBOVESPA energy commodities portfolio has become even more robust with this launch. The range of products in this segment now covers three commodities: cash-settled hydrous ethanol, anhydrous fuel ethanol with physical delivery and cash-settled crude oil.