Global Commodities Traders Propose Rule Changes to Protect Sugar Buyers on NY Exchange
Overview:
Global commodities traders are considering revisions to exchange rules aimed at safeguarding sugar buyers on deliveries traded through the Intercontinental Exchange (ICE) in New York.
Proposed Changes:
* Increased Demurrage: Higher costs for sellers who experience loading delays.
* Clarification on Bad Faith: Explicit prohibition of sellers acting in bad faith.
Background:
The issue of buyer protection gained traction after a dispute involving delayed sugar deliveries last year. The exchange currently lacks a specified time frame for vessel loading.
Market Impact:
* Potential Benefits for Buyers: Prompt delivery of sugar.
* Concerns for Sellers: Reduced participation and higher contract value volatility.
Timeline:
* Vote on proposed changes by an ICE committee in late February.
* Implementation of some changes potentially within this year.
* Demurrage increase may take longer due to its potential impact on contract value.
Industry Reaction:
Dimitri Varsano, co-global head of sugar trading at Sucden, anticipates "evolutions" in the futures contract and possible implementation of some changes this year. He notes that a clarification on bad faith may be implemented more quickly.