How CME's Product Team Cleared the Black Sea Grain Trade
Before December 2017, the world's fastest growing grain export region hedged bilaterally or not at all. The contracts that changed that deserve more credit than they get, including for what happened when the market underneath them disappeared.
By François Mégret
Product design at an exchange is mostly invisible work. When it succeeds, a market that used to run on bilateral trust starts running on margin and a clearing house, and within a few years nobody remembers it was ever done any other way. The Black Sea grain contracts CME Group launched at the end of 2017 are one of the better examples of that work in agricultural markets over the past decade, and the full arc of what happened to them is instructive.
What the market looked like before
By the middle of the last decade the Black Sea had become one of the largest grain export regions in the...
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