CHICAGO, June 21, 2010 – CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of trading and clearing services for iron ore 62% Fe, CFR China (TSI) swap futures, reflecting changing dynamics in the global ferrous industry. Trading will be available on the New York trading floor. Clearing services will be available through CME ClearPort®, a set of flexible clearing services open to over-the-counter (OTC) market participants to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes. Trading and clearing are scheduled to begin on July 11 for trade date July 12. These contracts will be listed by NYMEX and subject to the rules and regulations of NYMEX and CME.
Iron ore is a key raw material used in the production of crude steel. Although abundant and widely extracted, growing global demand, particularly from China, has resulted in growing price volatility.
"The ferrous industry is the second largest commodity market by volume after crude oil,” said Joe Raia, CME Group managing director of energy and metals products and services. “CME Group will be at the forefront of establishing a transparent and dynamic benchmark to more accurately and flexibly meet the risk management needs of the market. This contract complements 12 dry freight futures that we launched earlier this month, and furthers our goal of building a complete marketplace for seaborne dry freight products, providing risk management tools across the full ferrous production cycle. We look forward to announcing additional products to this suite."
The commodity code for the new contract will be TIO. It will be listed for 24 consecutive months, with August 2010 as the first listed contract month. The contract will be 500 dry metric tons in size, with a minimum price fluctuation of $0.01 per tick.