CME Group fines Andersons Inc $2 mln for wheat trading violations

Andersons

27/06/2020 01:43

By Julie Ingwersen
    CHICAGO, June 26 (Reuters) - CME Group  CME.O , parent of
the Chicago Board of Trade (CBOT), has ordered The Andersons Inc
 ANDE.O , an Ohio-based grain business, to pay a $2 million fine
for violating futures trading rules in late 2017, the exchange
said in a statement on Friday.
    The Andersons confirmed the settlement in a statement to
Reuters and said it cooperated with the CME's investigation. 
    "We do not believe we engaged in any wrongdoing," it said in
the statement.     
    The 6th-largest U.S. commercial grain handler by capacity
operates several Ohio grain warehouses that also serve as
delivery points for CBOT wheat futures.
    According to CME, The Andersons registered 2,000 contracts
of wheat certificates for delivery against CBOT December 2017
wheat futures on Nov. 29, 2017 - a day before the first notice
day for deliveries – in an effort to manipulate the spread, or
price difference, between futures contracts.
    At the time, the wheat registrations surprised traders, and
CBOT December futures fell sharply the next day, widening the
price spread between the December and back-month contracts. The
exchange said The Andersons placed bids in futures spreads in
anticipation of the market impact of its delivery registrations.
    A large number of CBOT delivery registrations can signal
that end-users such as flour mills are amply supplied and that
there is plenty of wheat to go around. That information, in
turn, can depress futures prices.
    "The Andersons registered the certificates with the belief
that the wheat spread would widen and trade into its resting
bids. The Andersons then re-purchased certificates at reduced
prices," the CME Group statement said.
    In the month leading up to the first notice day, the
Andersons sold wheat to flour mills in the Toledo, Ohio, area in
order to limit demand for the grain, the CME statement said.
Such a move could further support the perception of weak
cash-market demand, one trader said.

 (Reporting by Julie Ingwersen
Editing by Sonya Hepinstall)
 ((Julie.ingwersen@thomsonreuters.com; 1-312-408-8710; Reuters
Messaging: julie.ingwersen.thomsonreuters.com@reuters.net))