Market Matters Blog
Katie Micik DTN Markets Editor

Monday 03/17/14

Intuitive, with the Potential for Confusion
CME Group's new variable daily price limit mechanism replaces its "ad-hoc" fixed method with a fluid tool. It's intuitive that the limit should be higher when prices are higher and vice versa, but the new mechanism could introduce a little more confusion.[Read Full Blog Post]
Posted at 11:57AM CDT 03/17/14 by Katie Micik | Post a Comment
Comments (3)
Sounds like a hood plan although I'm with Mr. Hofmeyer I don't think it will make a lot of difference. The one good thing as for me when My neighbors ask what is the limit for corn I can say if CME would stop changing it I could tell you. It will be easier for me not to sound so dumb. Ha Ha !! I enjoy your articles Katie.
Posted by WARREN HARDY at 7:17AM CDT 03/18/14
How does 42 cents round to 45 cents? (see Newsome quote). This system seems fair to me. Keeping the daily limit at a level percent of price makes lots of sense. The displays that show current futures prices need to have the daily limit incorporated into the display, maybe just behind the commodity title.
Posted by Jim Williams at 2:42PM CDT 03/18/14
Hi Jim -- You are correct, in Newsom's simplified analysis, it should probably be 40 cents instead of 45. However, when I computed the 45-day averages, they were far from round numbers. So it's possible the 7% figure could be something like $.42617, which could be rounded up to 45.
Posted by KATIE MICIK at 2:57PM CDT 03/18/14
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