Kansas City Board of Trade

From MarketsWiki

Kansas City Board of Trade

Founded	1856
Headquarters	Kansas City, Missouri
Key People	Jeff Borchardt, President/CEO
Products	Hard red winter wheat futures/options
Web site	www.kcbt.com/

The Kansas City Board of Trade, located in Kansas City, Missouri, is the world's largest futures market for hard red winter wheat. Prices discovered at the Kansas City Board of Trade are the benchmark for wheat prices around the world.

For 132 years, the KCBT’s wheat futures contract has provided a risk management tool that contributes to the smooth, efficient flow of HRW wheat from field to table. Grain elevators, exporters, millers and producers use the exchange to protect their cash positions by buying or selling futures and options. Investors also utilize KCBT products as investment tools; speculators perform the crucial role in any futures market of assuming risk from hedgers.

1 Background
2 History
3 Board Members
4 News
5 References
6 External links

Background

This page is sponsored by...

KCBT offers trading in both KCBT Hard Red Winter Wheat futures and options contracts. In addition, the KCBT lists the Value Line® futures (1982) and options (1992) contracts, but through October 2007 no volume was recorded during that year. ^[1]

In 2004, the KCBT listed its products for trading on the e-cbot platform, but with the merger of CME and CBOT, KCBT products migrated to CME Globex in January 2008).

With the migration to the new trading platform, electronic trading hours also changed:

Hard red winter wheat futures and options trade electronically from 6:00 p.m. to 6:00 a.m. Central Time. Wheat futures trade electronically and by open outcry from 9:30 a.m. to 1:15 p.m.
Wheat options trade by open outcry from 9:30 a.m. to 1:25 p.m. and electronically from 9:30 a.m. to 1:15 p.m. and 6:00 p.m. to 6:00 a.m.

Value Line Stock Index Futures Contracts trade electronically from 5:00 p.m. CT to 3:15 p.m. CT.

The Kansas City Board of Trade has 192 Class A members, which include nearly all the major players in the U.S. and international grain trade. Class A members are allowed to trade any exchange product. They carry one vote in elections and gain one share of ownership in the exchange itself.

History

The Kansas City Board of Trade was founded in 1856 by a group of Kansas City merchants. It served a function similar to a Chamber of Commerce.

The KCBT was formally chartered in 1876, the same year a "grain call" was established, marking the beginning of futures trading. Located on the northern border between Kansas and Missouri and the junction of two rivers, Kansas City is situated in one of the most productive wheat-growing regions of the world.

Early trading at the exchange was primarily in cash grains. Today, grain elevators, exporters, millers and producers use the exchange to protect their cash positions by buying or selling futures and options.^[2]

The KCBT incorporated as a Delaware for-profit corporation in 1973.

The KCBT launched Value Line stock index futures, the world’s first stock index futures contract in 1982.

Options began trading on the Hard Red Witner wheat futures contract in 1984.

In 2004 the KCBT began clearing processing for the Winnipeg Commodity Exchange and began electronic trading during the evening hours.

In 2006 side-by-side trading began in the HRW wheat futures contract and exchange volume topped 600,000 for the first time in a single month, in August.

2007 brought a couple “firsts”. A new all-time monthly trading volume record was set in the HRW futures contract as 565,463 contracts were traded during the month of August. Later in the year, a KCBT membership sold for a record $725,000. One year earlier, that record had been $320,000.

Changes continued in 2008. Early in the year, electronic trading was switched to the CME Globex® platform. KCBT HRW wheat futures trading volume set a new single-day trading volume record of 47,933 contracts. Side-by-side trading in the wheat options contract began. The HRW wheat futures contract was amended starting with the July 2008 wheat futures contract. Salina/Abilene and Wichita were added as delivery points and various contract delivery terms and conditions were changed.

Board Members

Chairman: Jeffrey Voge (elected Jan. 2008)
First Vice Chairman: James W. Neville, Jr. (elected Jan. 2008)
Second Vice Chairman: Richard L. Mandl (elected Jan 2008)

Directors (elected Jan. 2008):

Randall O. Wallace, FC Stone, L.L.C (two-year term)
Dixon B. Mooney, individual member (two-year term)

Director serving second year of year term:

William E. Krueger, Lansing Trade Group, LLC
Steven K. Campbell, Louis Dreyfus Corp.
Richard W. Plackemeier, Prudential Bache Commodities, LLC
Greg Edelblute, Cereal Food Processors, Inc.
Jim Bosley, individual member.
Jim Paulsen, an individual member, will serve one year, finishing out a term vacated by Richard L. Mandl when he was elected second vice chairman

News

The KCBT announced changes in the settlement procedures for the KCBT Hard Red Winter wheat futures contract effective on Tuesday, September 2, 2008, subject to Commodity Futures Trading Commission approval. The changes were made to address the issue of individual contract months settling out of line with spread trade. Current settlement procedures require all contract months to settle based on the weighted average of trade in each contract month. At times, these procedures create disparities between individual contract month settlements and the traded spread differentials between contract months. In an effort to mitigate these disparities, changes were made that provide for settlements on all but the lead contract month based on spread relationships. The settlement price of the lead contract month (defined as the contract month with the largest open interest) shall be determined by the weighted average method of the trades in the closing period in accordance with KCBT rules. The remaining contract months shall be settled based on spread price relationships, considering spread trades reported during the close.^[3]