Minneapolis Grain Exchange, Inc.
| Minneapolis Grain Exchange, Inc. | |
| |
| Founded | 1881 |
|---|---|
| Headquarters | 400 South 4th Street, Minneapolis, MN 55415
|
| Key People | Mark G. Bagan, President/CEO Murray Stahl,Chairman |
| Products | Cash, futures and options grains products |
| @MGEX1 | |
| Website | www.mgex.com/ |
Minneapolis Grain Exchange, Inc. (MGEX)[1] was founded in 1881, and has been the world's principal market for Hard Red Spring Wheat (HRSW) - first as a cash market and subsequently for futures and futures options. During 2019 and early 2020, HRSW futures and futures options were the only actively traded agricultural contracts on MGEX, trading 2,311,636 futures and 46,179 options on HRSW in 2019.[2]
In May 2010, exchange member-owners voted to convert the exchange to a for-profit company, [3] although MGEX was still a membership organization for another 10 years.[4]
In January of 2012, the National Futures Association (NFA) announced that it had formed a joint committee with the CME Group, InterContinental Exchange (ICE), Kansas City Board of Trade (KCBOT) and MGEX to review how self-regulatory organizations could strengthen current safeguards for customer segregated funds held at the firm level in light of the MF Global bankruptcy.[5]
In April 2015, MGEX and the Carbon Trade Exchange announced the establishment of a new business relationship that would result in the launch of CTX in the California Cap-and-Trade Program. MGEX planned to provide support and services for a spot market exchange trading Allowances and Offsets in the state-based program.[6]
On April 20, 2020 MGEX congratulated Bitnomial, a new DCM that had been approved to trade bitcoin futures and futures options, in a press release in which it stated that it would be Bitnomial's clearing house. MGEX did not say when the service would commence.[7]
In September 2020, Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Exchange Group, and the Minneapolis Grain Exchange announced that MGEX membership had overwhelmingly voted in favor of demutualizing. The vote allowed MIH and MGEX to proceed with merger preparations in accordance with an agreement previously announced by the parties.
The merger was expected to close in the fourth quarter of 2020, subject to the satisfaction of customary closing conditions and regulatory approvals. Upon completion of the merger, MGEX will become a wholly owned subsidiary of MIH. MIH agreed to maintain the trading and clearing operations of MGEX, including its Hard Red Spring Wheat contracts, while adding new futures products. The board of directors of each company previously approved the transaction.[8]
In 2021, according to the Futures Industry Association's worldwide exchange volume report, MGEX ranked 44th with 3.87 million contracts traded, up 40 percent from 2.76 million traded in 2020.
MGEX is a Primary Member of CCP Global, the global association of Central Counterparties (CCP), which represents 42 members who operate more than 60 individual CCPs across EMEA, the Americas and the Asia-Pacific region.[9]
Products[edit]
MGEX offers futures and futures options contracts primarily on agricultural products, and its most successful contracts have been based on Hard Red Spring Wheat (HRSW).[10] Futures are traded exclusively electronically on the CME Globex platform. Options are traded side by side, that is, both electronically and by open outcry. HRSW is a high protein wheat used in bagels, high quality breads and cereals.[11] It is planted mostly in the U.S. Northern Plains and the Canadian Prairies.
On May 20, 2012, single-click functionality became available for market participants between the MGEX HRSW futures and the CBOT Soft Red Winter Wheat futures contracts. Additionally, on March 11, 2013, this functionality became available between MGEX HRSW futures and KCBT Hard Red Winter Wheat futures contracts. This single-click functionality allows market participants around the world a more secure and convenient way to spread trade between the wheat classes.
On August 13, 2012, futures on apple juice concentrate were listed but were delisted by the end of the decade due to a lack of trading interest. Apple Juice Concentrate (AJC)[12]
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 opportunities for traditional hedgers and speculators. MGEX Agricultural Index product characteristics are:
- 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 options on deliverable futures.
- 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 listed for trading
- Exclusively Electronic — MGEX agricultural indexes trade on an electronic platform.[13]
In September 2019, MGEX partnered with MIAX Options to list and clear futures on MIAX's SPIKES Volatility Index (SPIKES). Futures trading launched on November 18, 2020.[14] In a memo dated November 29, 2020, MGEX said that it would suspend trading at 12:15 that day in SPIKE futures except for trades that would close position. MGEX said trading would remain suspended until it determined if it could resolve unnamed issues about the product with the Securities and Exchange Commission and the Commodity Futures Trading Commission.[15] The exchange traded 181 volatility index contracts in total during a little more than one week of trading in 2019. [16]
Open Outcry And Electronic Trading[edit]
Dec. 19, 2008 marked the final day of open outcry futures trading at MGEX. On Jan. 13, 2008, MGEX migrated to the CME Globex electronic trading platform. HRSW Futures trade exclusively electronically. Options trade by open outcry as well as electronically
•MGEX HRSW Trading Hours:
- Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. central time (CT);
- Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT;
- Monday to Friday, electronic trading and open outcry options from 8:30 a.m. to 1:30 p.m. CT
•MGEX Index Products Trading Hours:
- Sunday to Friday, 7:00 p.m. to 1:45 p.m. CT
•Contract settlement period for HRSW and all Index Products:
- 1:14:00 p.m. to 1:14:59 p.m. CT
•Pre Open for HRSW and all Index Products:
- Sunday, 4:00 p.m. to 7:00 p.m. CT
- Monday to Thursday, 4:45 p.m. to 7:00 p.m. CT
- Monday to Friday, 8:00 a.m. to 8:30 a.m. CT (HRSW only)
- Post Close Pre-Open: Monday to Friday, 2:30 p.m. to 4:00 p.m. CT
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.
In early March of 2012, it was announced that CME Group and MGEX would launch of MGEX-CBOT Wheat Spread Options to begin trading on March 26 of that year. These contracts are subject to the rules and regulations of CBOT. MGEX-CBOT Wheat Spread Options are unique hedging tools based on the price differentials between hard red spring wheat futures listed on the MGEX and soft red winter wheat futures on the Chicago Board of Trade (CBOT), which are the result of fundamental supply and demand factors and varying protein levels between these two distinct classes of wheat.
As of June 12, 2012, Hard Red Spring Wheat open outcry options trading began opening at 7:20 a.m. CT on the trading days the USDA releases monthly World Agriculture Supply & Demand Estimates, any Acreage, Crop Production, Prospective Planting reports and quarterly Grain Stocks reports.
History[edit]
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.[17]
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.
Key People[edit]
- Mark G. Bagan, President/CEO
- Murray Stahl, Chairperson
- Kerry Melius, First Vice Chairperson
- Martin F. Farrell, Second Vice Chairperson
Contract Volume[edit]
| Year | Total Annual Volume | Percent Change |
| 2021 | 3,873,016 | 40% |
| 2020 | 2,766,442 | 17.3% |
| 2019 | 2,357,996 | 1.0% |
| 2018 | 2,335,284 | (-) 16.5% |
| 2017 | 2,799,365 | 28.1% |
| 2016 | 2,185,098 | (-) 5.6% |
| 2015 | 2,315,186 | 6.0% |
| 2014 | 2,177,740 | 46.8% |
| 2013 | 1,483,657 | 21.3% |
| 2012 | 1,223,457 | (-) 29.4% |
| 2011 | 1,732,331 | 2.7% |
| 2010 | 1,687,228 | 40.8% |
| 2009 | 1,198,013 | (-) 12.0% |
| 2008 | 1,361,042 | (-) 24.1% |
| 2007 | 1,792,310 | 11.1% |
| 2006 | 1,613,239 | 16.5% |
| 2005 | 1,384,750 | 0.5% |
| 2004 | 1,378,447 | 29.3% |
Layne Carlson John Lothian News Interview[edit]
Layne Carlson Tells the Story Behind MGEX’s Apple Juice Contract
The Minneapolis Grain Exchange, now known as MGEX, launched Apple Juice Concentrate (AJC) futures and options on August 13, 2012. We asked Layne Carlson, corporate secretary and treasurer of the exchange, for the story behind the new Apple Juice contract. Interview by JLN publisher John Lothian. Published August 23, 2012. Watch at JohnLothianNews.com[18]
Membership[edit]
The Minneapolis Grain Exchange, Inc. is a 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:
- ABN AMRO Clearing Chicago LLC
- ADM Investor Services, Inc.
- CHS Hedging, LLC
- ED&F Man Capital Markets Inc.
- INTL FCStone Financial Inc.
- J.P. Morgan Securities LLC
- Marex Spectron
- Rand Financial Services, Inc.
- SG Americas Securities, LLC
- Term Commodities, Inc.
- UBS Securities, LLC
- Wedbush Securities Inc.
- Wells Fargo Securities, LLC
Membership Resources
- Membership Transfers[19]
- Membership Prices[20]
- Historical Membership Prices[21]
- Trading & Clearing Fees[22]
References[edit]
- ↑ Home Page. Minneapolis Grain Exchange, Inc..
- ↑ Global Volume and Open Interest Reports, December 2019 and March 2020. Futures Industry Association.
- ↑ MGEX Gets For-Profit Conversion Approval. The Wall Street Journal.
- ↑ Memberships. MGEX.
- ↑ Press Release. NFA.
- ↑ CTX and MGEX Announce Key Partnership. Exchange press release.
- ↑ MGEX Extends Congratulations To Bitnomial. Mondo Visione.
- ↑ Minneapolis Grain Exchange Membership Approves Demutualization For Purposes of Merger With Miami International Holdings. New York City Biz List.
- ↑ CCP Global Members. CCP Global.
- ↑ HRSW Brochure. Minneapolis Grain Exchange.
- ↑ MGEX Website. Minneapolis Grain Exchange.
- ↑ AJC Fact Sheet. Minneapolis Grain Exchange.
- ↑ Agricultural Index Brochure. Minneapolis Grain Exchange.
- ↑ MIAX and MGEX Announce SPIKES® Futures Launch Date. Press Release.
- ↑ Memo re: Suspension of SPIKES Futures Trading. MGEX.
- ↑ Global Volume and Open Interest Reports, December 2019. Futures Industry Association.
- ↑ Cleaning Stone and Masonry: Minneapolis Grain Exchange. Google Books.
- ↑ Layne Carlson Tells the Story Behind MGEX’s Apple Juice Contract. John Lothian News.
- ↑ Membership Transfers. Minneapolis Grain Exchange.
- ↑ Membership Prices. Minneapolis Grain Exchange.
- ↑ Historical Membership Prices. Minneapolis Grain Exchange.
- ↑ Trading & Clearing Fees. Minneapolis Grain Exchange.