UPDATE: CME Cuts Back Expanded Hours Proposal; 21-Hour Day Could Start June 4

CME Group Inc. (CME) said Thursday it is now seeking to expand grains futures trading to 21 hours per day, rather than 22 hours, in response to concerns from grain industry groups.

CME's announcement comes a day after it withdrew its proposal to the Commodity Futures Trading Commission to expand to a 22-hour day. That plan had been set to take effect Monday, but had drawn criticism from some traders, brokerage firms and grain elevator operators.

Under the new plan, trading of corn, wheat and soybean futures will be halted for three hours each day, from 3 p.m. to 6 p.m. ET. The prior plan included only a two-hour break, from 5 p.m. to 7 p.m.

"We're working with the CFTC to implement these new hours as soon as possible," CME spokesman Chris Grams said. The exchange seeks to implement that plan no later than June 4, Grams said.

In addition to its new proposal to expand trading to 21 hours, up from 17, CME filed a separate request with the CFTC Thursday asking them to expedite the request. If approved, the expanded hours could begin as soon as Monday's trading day. The CFTC typically requires a waiting period of 10 business days before exchanges can enact changes to trading hours.

A statement from CME on the new plan included support from the National Grain and Feed Association, a large industry group that had called for a 30-day delay before expanded hours began.

"This action by the CME Group demonstrates the value of collaboration between the exchange and users of futures and options markets who rely heavily on the [Chicago Board of Trade] contracts to hedge marketplace risk," NGFA acting president Randall Gordon said.

The NGFA had voiced concern about CME's original plan, saying the two-hour break did not give grain merchants enough time to reconcile their trading accounts and "perform other required accounting and back-office operations" without adding to staffing costs.

The new plan doesn't address another criticism of expanded trading hours: that the market would be trading immediately following monthly government crop reports. Critics have said that allowing trade immediately after the report will make for highly volatile markets and put some traders at a disadvantage.

CME's current schedule halts trading each day from 8:15 a.m. ET until 10:30 a.m., and again from 2:15 p.m. until 7 p.m.

The U.S. Agriculture Department currently releases its monthly supply and demand reports at 8:30 a.m. ET.

Despite its support for the CME's revised plan, the NGFA remains concerned about the timing of USDA reports, spokesman Todd Kemp said. The NGFA has received a "strong commitment" from CME that it will continue to look for ways to address the issue, Kemp said, adding that his group hopes the IntercontinentalExchange Inc. (ICE), which launched its own grain futures on a 22-hour trading schedule this month, "joins the conversation."

"Ideally the reports would be released when both markets are closed," Kemp said.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; [e-mail]