Electronic grain trade draws new players - CBOT

By Julie Ingwersen

CHICAGO (Reuters) - New types of market players drawn to electronic trade have helped boost the volume in Chicago Board of Trade BOT.N agricultural futures, an exchange official said on Tuesday.

The agricultural markets have had about 35 new users since the launch of side-by-side trade, said Dave Lehman, CBOT chief economist and managing director of business development, speaking in Chicago at the Reuters Global Biofuel Summit.

"That doesn't seem like a big number, but certainly we have seen very strong growth in volume and open interest in those products," he said.

Year-on-year volume in the CBOT's agricultural futures and options was up nearly 40 percent in 2006, due in large part to the launch last August of side-by-side electronic and open-outcry grain futures trading.

The growth has come despite occasional glitches that have shut down the CBOT's electronic trading platform, including three outages last week over two days. The CBOT on Friday said it had identified an issue with its trading host and was working to fix the problem.

"That's confirmation of the strategy of offering two platforms -- you do have another venue to go to if you can't access one," Lehman said.

Lehman said CBOT rules prohibited him from seeing who the 35 new users were but said the grain markets have seen increased participation by large institutional investors seeking to broaden their holdings by investing in commodities.

"The use of markets for portfolio diversification by large institutional investors, pension funds, endowments, those types of traders, has grown," he said.  Continued...