Minneapolis Grain Exchange

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Minneapolis Grain Exchange
Founded	1881
Headquarters	Minneapolis, MN
Key People	Michael Ricks, Chairman; Mark G. Bagan, President/CEO
Products	Cash, futures and options grains products
Twitter ID	MGEX1
Web site	www.mgex.com/

Minneapolis Grain Exchange (MGEX)^[1] was founded in 1881, and has been the principal market for Hard Red Spring Wheat (HRSW) - first as a cash market and subsequently for futures and options.

The Minneapolis Grain Exchange ranked number 49 in 2009 in the Futures Industry Association's global list of top 53 derivatives exchanges measured by volume, down 12.6 percent on 2008's volume figure.^[2] The FIA list, published in early April 2010, reports that total volume for 2009 fell to 1.23 million from 2008's figure of 1.41 million.

Products

Since its inception in 1881, MGEX has been the principal market for Hard Red Spring Wheat (HRSW), offering futures and options contracts based on this unique commodity. Futures are traded exclusively electronically on the CME Globex platform. Options are traded side-by-side. HRSW is one of the highest-protein wheats. It is found in bagels, high quality breads and cereals.^[3] It is planted mostly in the U.S. Northern Plains and the Canadian Prairies.^[4]

In addition to futures and options for HRSW, the following agricultural index products are also listed at the exchange:

• MGEX Hard Red Spring Wheat Index Futures and Options (HRSI)
• MGEX Hard Red Winter Wheat Index Futures and Options (HRWI)
• MGEX Soft Red Winter Wheat Index Futures and Options (SRWI)
• MGEX National Corn Index Futures and Options (NCI)
• MGEX National Soybean Index Futures and Options (NSI)

The five index products are financially settled to a spot index of country elevator pricing calculated daily by DTN, an Omaha-based electronic commerce and information services company.

The five financially settled Agricultural Index contracts provide trading options for traditional hedgers and speculators.

MGEX Agricultural Index products differ from traditional futures and options contracts in a number of ways.

• Financial Settlement — When index futures and options expire they settle to a financial value, eliminating deliveries. There are no delivery specifications, storage costs, grade differentials or load-out costs.

• Simultaneous Expiration — At the end of each month, futures and options settle based on a simple average of the index value for the last three trading days of that month. This means options bought or sold for September expire at the end of September, not August like traditional options.

• Index based, country-origin pricing — DTN collects hundred of elevator bids daily, and in turn, calculates indexes upon which MGEX agricultural index futures and options are settled.

• All Calendar Months Traded

• Hedging

• Exclusively Electronic — MGEX agricultural indexes trade on an electronic platform.^[5]

Open Outcry And Electronic Trading

Dec. 19, 2008 marked the final day of open outcry futures trading at MGEX, HRSW Futures trade exclusively electronically. Options trade side-by-side.

• 7:15 a.m. - HRSW Futures and Options overnight trading ends
• 9:30 a.m. - 1:30 p.m.: HRSW Futures trade electronically
• 9:30 a.m. - 1:30 p.m.: HRSW Options trade side by side
• 6 p.m. - 1:45 p.m.: Agricultural Index Products trade electronically
• 6 p.m. - 7:15 a.m.: HRSW Futures and Options trade electronically

On Jan. 13, 2008 (for trade date Jan. 14, 2008), MGEX moved electronic trading for its futures and options products from the e-CBOT platform to the CME Globex electronic trading platform.^[6]

History

Founded as the Minneapolis Chamber of Commerce in 1881, the MGEX has been a marketplace for producers, processors and millers for more than 125 years.

The three Grain Exchange buildings in downtown Minneapolis are listed on the National Register of Historic Places.^[7]

The Minneapolis Chamber of Commerce opened as a regional cash marketplace to promote fair trade and to prevent trade abuses in wheat, oats and corn. Before the development of this centralized marketplace, farmers in the region had no way of knowing if they were receiving the best price for their grain. Most farmers harvested and sold their crops at the same time, and the subsequent overabundance of grain reaching the market set the supply-and-demand curve askew. Although the Chicago Board of Trade existed in Chicago, grain was a local issue in the 1900s; thus, a local Minneapolis market reflected unique local grain producer/user supply/demand and quality issues.

In 1883, just two years later, the Chamber of Commerce introduced its first futures contract: Hard Red Spring Wheat. This contract was launched to address price risk management needs of buyers and sellers of spring wheat and still trades today.

For over 60 years the exchange operated as the Minneapolis Chamber of Commerce. By 1946, “Chamber of Commerce” had become synonymous with organizations devoted mainly to civic and social issues. In 1947, the exchange was renamed the Minneapolis Grain Exchange. Today the exchange uses MGEX as first reference and is most recognized by its logo.

Membership

The Minneapolis Grain Exchange is a non-profit, membership organization. MGEX provides facilities for and oversight of trading that occurs on the exchange, but does not participate in trading and does not establish prices. Memberships on MGEX are bought and sold between individuals and firms. There are a fixed number of memberships, or seats, therefore the price fluctuates according to supply and demand.

A full membership secures trading, voting rights and the opportunity to become a clearing member. A delegate membership is also available, offering an individual the opportunity to trade for his or her own account.

The MGEX clearing members include:

• ADM Investor Services, Inc.
• Alaron Trading Co.
• Country Hedging, Inc.
• FC Stone, LLC
• Fortis Clearing Americas LLC
• Frontier Futures, Inc.
• Infinium Capital Management
• J.P. Morgan Futures, Inc.
• MF Global Inc.
• Newedge Financial, Inc., a division of Newedge USA, LLC
• Newedge USA, LLC
• Penson GHCO
• Prudential Bache Commodities, LLC
• TENCO, INC
• Term Commodities, Inc.
• UBS Securities, LLC

Membership Resources

• Membership Transfers^[8]
• Membership Prices^[9]
• Historical Membership Prices^[10]
• Trading & Clearing Fees^[11]

Recent News

• On July 22, 2010 MGEX Announces Fourth Highest Electronic Trading Volume Day in History, ^[12]

• On July 15, 2010 MGEX Marks Second Best Electronic Volume Day; Top 10 Overall Volume Day, ^[13]

• On July 1, 2010 MGEX Tallies Second Best Total Volume Month in its 129 Year History, ^[14]

• On June 24, 2010 MGEX Sets New Monthly Electronic Volume Record, ^[15]

• On June 14, 2010 MGEX Reports Continued Record-Breaking Electronic Volume In June, ^[16]

• On June 8, 2010 MGEX Reports Second Highest Daily Electronic Trading Volume ^[17]

• On June 2, 2010 MGEX Sets Second Highest Daily Electronic Trading Volume Record ^[18]

• On June 1, 2010 MGEX Announces Continued Open Interest Growth ^[19]

• On May 14, 2010 MGEX Announces Change in Corporate Structure ^[20]

• On May 3, 2010 MGEX Reports April Volume and Open Interest Growth ^[21]

• On Apr. 16, 2010 MGEX Congratulates Business Partner On CFTC Approval ^[22]

• On Apr. 1, 2010 MGEX Announces Continued Volume and Open Interest Growth in March ^[23]

• On March 15, 2010 MGEX announced they would provide clearing services, counterparty risk management of trades as well as collect and maintain performance bonds for The Trend Exchange (TrendEx) contracts^[24]

• On March 5, 2010 MGEX Ownership Eliminates Restriction on Deliverable Stocks for its Hard Red Spring Wheat Contract ^[25]

• On March 2, 2010 MGEX Reports Strong Volume and Open Interest Growth in February.^[26]

• On Feb. 3, 2010 MGEX Reports Strong January HRSW and Total Volume and Open Interest Growth.^[27]

• On Jan. 5, 2010 MGEX Announces December and Calendar Year End Open Interest Growth. ^[28]

• On Dec. 2, 2009 MGEX Reports Strong November Volume and Open Interest Growth, Records. ^[29]

• On Nov. 25, 2009 MGEX Sets New Monthly Electronic Trading Volume Record; Top Ten Electronic Volume Day. ^[30]

• On Nov. 24, 2009 MGEX Announces Top Five Electronic Volume Day; November 2009 Second Best Electronic Volume Month in History. ^[31]

• On Nov. 19, 2009 MGEX Announces Another Top Ten Electronic Volume Day; Continued Strong Month-to-Date Trading Volume. ^[32]

• On Nov. 9, 2009 MGEX Shatters Daily Electronic Trading Volume Record, Total Volume Fifth Best in Exchange History. ^[33]

• On Nov. 3, 2009 MGEX Reports Second Best Daily Electronic Trading Volume. ^[34]

• On Nov. 2, 2009 MGEX Reports Strong October Open Interest Growth: SRWI and HRSW Volume. ^[35]

• On Oct 19, 2009 MGEX Board of Directors Appointed Public Directors, Officers. .^[36]

• On Oct 1, 2009 MGEX opened a new fiscal year with new September volume and open interest records.^[37]

• On Sept 1, 2009 MGEX Reports Strong August 2009 Volume and Open Interest Growth. ^[38]

• On Aug. 3, 2009 MGEX Sets new July monthly electronic volume record; posts fourth best daily electronic volume. ^[39]

• On July 17, 2009 MGEX Joins the World of Twitter. ^[40]

• On June 25, 2009 MGEX breaks monthly electronic trading volume record. ^[41]

• On June 3, 2009 MGEX breaks daily electronic trading volume record.^[42]

• On June 1, 2009 MGEX reports strong May 2009 volume growth.^[43]

• On Apr. 30, 2009 MGEX April 2009 volume exceeds March and previous year.^[44]

• On Apr. 24, 2009 MGEX sets all-time monthly electronic volume record.^[45]

• On Apr. 21, 2009 MGEX breaks daily electronic volume record.^[46]

• On Feb. 23, 2009 MGEX and WeatherBug begin joint marketing venture.^[47]

• On Feb. 13, 2009 MGEX launches new real estate Website at www.mgex.com/realestate.^[48]

• On Jan. 23, 2009 MGEX breaks daily electronic trade record.^[49]

• On Jan. 14, 2009 MGEX Board of Directors appoints Rick Dusek to fill vacant board position.^[50]

• On Dec. 19, 2008, December 19 marked the final day of open outcry futures trading at MGEX.^[51]

• On Dec. 12, 2008, MGEX breaks daily electronic trade record, holds annual meeting.^[52]

• On Oct. 31, 2008, MGEX marks new record in electronic volume.^[53]

• On Oct. 24, 2008, MGEX board recommends trading exclusively electronically. After a long history of futures and options open outcry trading, MGEX is closing its trading pits effective December 19, 2008. ^[54]

• On Oct. 20, 2008, MGEX promoted Georgette McDonald to director, business services and product development.^[55]

• On Oct. 14, 2008, MGEX appointed new public directors for 2008-2009. Four public directors were appointed by the Board to serve one-year terms. Curt Denisuik, Director of Commodity Risk Management, Canadian Wheat Board; James S. Ginsburg, Managing Partner at Vernon & Park Capital, L.P.; and William R. Power, long-time equities and futures investor, return to the Board. New to the board of directors this year is Steve Fanady whose background includes being a member and independent trader in Chicago.

• On Oct. 3, 2008, new members of the MGEX board of directors elected. The elected candidates included Scott A. Cordes, Country Hedging, Inc.; Scott O. Hedin, St. Croix Commodities, Inc.; Christopher T. Matzdorf, UBS Securities, LLC; and Scott D. Nagel, ADM-Benson Quinn, a division of Archer Daniels Midland. The newly elected board members will serve two year terms, effective immediately.

• On Sept. 12, 2008, New enhancements will be made to the MGEX (Minneapolis Grain Exchange or Exchange) Hard Red Spring Wheat (HRSW) futures contract settlement process. Beginning Sep. 15, the HRSW futures contract will settle to a volume-weighted average settlement price for each individual HRSW futures contract month.

• On Sept. 4, 2008, MGEX breaks calendar-year electronic volume record with 460,146 contracts traded since Jan. 2, 2008.

• On Sept. 3, 2008, MGEX announces all-time volume record for fiscal year 2007-2008 with 1,684,439 contracts traded.

• On July 11, 2008, MGEX announced it planned to change the official closing period for the MGEX Hard Red Spring Wheat futures contract to match the options contracts from the last 30 seconds of trading to the last 60 seconds of trading. The change to the settlement price process would become more inclusive by taking into consideration bids, offers and trades from the final trading minute from both platforms. The changes would be made as of July 14, 2008.^[56]

• On May 23, 2008, MGEX promotes Todd Posthuma to associate director, market operations and information technology.

• On Apr. 14, 2008, MGEX begins side-by-side trading in options.

• On Apr. 9, 2008, MGEX names Rita Maloney manager marketing, communications, media relations.

• On Feb. 26, 2008, MGEX reports remote clearing enhancements.

• On Feb. 25, 2008, MGEX HRSW futures contract trades at $24 per bushel, the highest price]] ever for a wheat futures contract.

• On Feb. 8, 2008, MGEX expands price limits to $.60 per bushel above or below the previous day's settlement price.

• On Jan. 13, 2008, MGEX migrated to the CME Globex electronic trading platform.

• On Jan. 1, 2008, MGEX reports record calendar-year volume, monthly volume and membership values. The exchange broke its all-time calendar-year trading volume with 1,826,807 contracts traded, which is 10 percent higher than the record set in 2006 (1,655,034 contracts traded). December trading volume also set a new record with a 46 percent increase in trading over the previous December record set last year (130,797) contracts traded versus 89,817 contracts traded). In 2007, seven of the 12 months set new monthly volume records. A membership traded at an all-time high of $285,000 Dec. 28, 2007.

• On Dec. 14, 2007, MGEX welcomed Vice President, Business Development Roger Hipwell.

• On Oct. 15, 2007, the MGEX named its 2007-2008 public directors, officers and committees. Four public directors were appointed to the board to serve one-year terms. Curt Denisuik, director of commodity risk management, Canadian Wheat Board returned to the board. New to the board of directors were Robert D. Gordon, CEO of DTN, James S. Ginsburg, managing partner at Vernon & Park Capital, L.P., and William R. Power.

References

1. ↑ Home Page. Minneapolis Grain Exchange. Retrieved on October 25, 2007.
2. ↑ 2009 Annual Volume Survey. FIA magazine. Retrieved on April 8, 2010.
3. ↑ MGEX Website. Minneapolis Grain Exchange. Retrieved on July 17, 2008.
4. ↑ MGEX Website. Minneapolis Grain Exchange. Retrieved on July 17, 2008.
5. ↑ Agricultural Index Brochure. Minneapolis Grain Exchange. Retrieved on May 6, 2009.
6. ↑ Press Release. Minneapolis Grain Exchange. Retrieved on January 13, 2008.
7. ↑ Cleaning Stone and Masonry: Minneapolis Grain Exchange. Google Books. Retrieved on July 15, 2009.
8. ↑ Membership Transfers. Minneapolis Grain Exchange. Retrieved on January 25, 2008.
9. ↑ Membership Prices. Minneapolis Grain Exchange. Retrieved on January 25, 2008.
10. ↑ Historical Membership Prices. Minneapolis Grain Exchange. Retrieved on January 25, 2008.
11. ↑ Trading & Clearing Fees. Minneapolis Grain Exchange. Retrieved on January 25, 2008.
12. ↑ Press Release. MGEX. Retrieved on July 22, 2010.
13. ↑ Press Release. MGEX. Retrieved on July 15, 2010.
14. ↑ Press Release. MGEX. Retrieved on July 1, 2010.
15. ↑ Press Release. MGEX. Retrieved on June 24, 2010.
16. ↑ Press Release. MGEX. Retrieved on June 14, 2010.
17. ↑ Press Release. MGEX. Retrieved on June 8, 2010.
18. ↑ Press Release. MGEX. Retrieved on June 2, 2010.
19. ↑ Press Release. MGEX. Retrieved on June 1, 2010.
20. ↑ Press Release. MGEX. Retrieved on May 14, 2010.
21. ↑ Press Release. MGEX. Retrieved on May 3, 2010.
22. ↑ Press Release. MGEX. Retrieved on April 16, 2010.
23. ↑ Press Release. MGEX. Retrieved on April 1, 2010.
24. ↑ Press Release. MGEX. Retrieved on March 15, 2010.
25. ↑ Press Release. MGEX. Retrieved on March 5, 2010.
26. ↑ Press Release. MGEX. Retrieved on March 2, 2010.
27. ↑ Press Release. MGEX. Retrieved on February 3, 2010.
28. ↑ Press Release. MGEX. Retrieved on January 5, 2010.
29. ↑ Press Release. MGEX. Retrieved on December 2,2009.
30. ↑ Press Release. MGEX. Retrieved on November 25,2009.
31. ↑ Press Release. MGEX. Retrieved on November 24,2009.
32. ↑ Press Release. MGEX. Retrieved on November 19,2009.
33. ↑ Press Release. MGEX. Retrieved on November 9,2009.
34. ↑ Press Release. MGEX. Retrieved on November 3,2009.
35. ↑ Press Release. MGEX. Retrieved on November 2,2009.
36. ↑ Press Release. MGEX. Retrieved on October 19,2009.
37. ↑ Press Release. MGEX. Retrieved on October 1,2009.
38. ↑ Press Release. MGEX. Retrieved on September 1,2009.
39. ↑ Press Release. MGEX. Retrieved on August 3,2009.
40. ↑ Press Release. MGEX. Retrieved on July 17,2009.
41. ↑ Press Release. MGEX. Retrieved on June 25,2009.
42. ↑ Press Release. MGEX. Retrieved on June 3, 2009.
43. ↑ Press Release. MGEX. Retrieved on June 1, 2009.
44. ↑ Press Release. MGEX. Retrieved on April 30, 2009.
45. ↑ Press Release. MGEX. Retrieved on April 24, 2009.
46. ↑ Press Release. MGEX. Retrieved on April 21, 2009.
47. ↑ Press Release. MGEX. Retrieved on February 23, 2009.
48. ↑ Press Release. MGEX. Retrieved on February 13, 2009.
49. ↑ Press Release. MGEX. Retrieved on January 23, 2009.
50. ↑ Press Release. MGEX. Retrieved on January 14, 2009.
51. ↑ Press Release. MGEX. Retrieved on December 19, 2008.
52. ↑ Press Release. MGEX. Retrieved on December 12, 2008.
53. ↑ Press Release. MGEX. Retrieved on October 31, 2008.
54. ↑ Press Release. MGEX. Retrieved on October 24, 2008.
55. ↑ Press Release. Grain Net. Retrieved on October 22, 2008.
56. ↑ Press Release. Minneapolis Grain Exchange. Retrieved on July 17, 2008.