Relationship-Based Trading in Agricultural Products

Relationship-based trading, encompasses communication between market participants for the purpose of discerning interest in and facilitation of executing a transaction. Trades resulting from relationship-based trading include block trades and cross trades on CME Globex. These types of transactions are allowed across all other asset classes at CME Group and are highly regulated.

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 agrbt@cmegroup.com

Liquidity Provider Contact Directory

View a list of market-making firms open for bilateral communication for Ags products.

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Key Benefits of Relationship-Based Trading in Agricultural Products

  • Ability to execute trades when market liquidity is not evident – including in deferred contract months, less liquid option strikes or in spread or combination strategies
  • Source the opposite side of a large transaction
  • Minimize the impact of large orders on market liquidity 

Types of Relationship-Based Trading in Agricultural Products

With relationship-based trading, participants can enter into conversations with other market participants that include discussion of the price, size and direction of an order that may lead to one of two very distinct types of transactions: crossing on CME Globex and block trades.

Crossing on CME Globex

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  • Counter parties can have pre-execution communication around price, size and direction
  • Cross is a Globex order type that interacts directly with the existing central limit order book with both a buy and sell order upon submission to the matching engine
  • Available to all market participants

Detailed information concerning the requirements for entry via a Globex cross is available in the Market Regulation Advisory Notice on pre-execution communications regarding CME Globex trades.

View the MRAN.

Block Trades

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  • A block trade is a privately negotiated trade that is submitted to CME Clearing through CME Direct or CME ClearPort
  • It represents the price level, quantity and direction agreed in the communication and does not interact with the central limit order book
  • It must be reported to the market place within a designated reporting time and only Eligible Contract Participants (“ECPs”) are allowed to execute block trades

Block trades are governed by Rule 526 (Block Trades) and the Market Regulation Advisory Notice concerning block trades. Detailed information on block trade requirements is available in the Market Regulation Advisory Notice on Block Trades.

View the MRAN.

Crosses versus Blocks

There are multiple characteristics of blocks and crosses. View the table below to understand the differences.

  Block  Cross 
Bi-Lateral Conversation Y Y
Request for Quote (RFQ) Required N Y
Reporting Time Y N
Volume Threshold Y N
Venue Clearport CME Globex
Participant Eligible Contract Participant All
Centrally Cleared Y Y

* G-Cross also allowed for Agricultural futures

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