"Biscuit break" makes quiet debut in shorter CBOT grain cycle


* New trading cycle revives morning pause in grain markets

* Pause called "biscuit break" by some traders

* No ICE corn contracts trade during Board of Trade break

By Tom Polansek

CHICAGO, April 8 (Reuters) - A revived pause in the Chicago Board of Trade's grain trading schedule did little to invigorate volume on Monday as the historic exchange launched a shorter cycle for its agricultural markets.

Known as the "biscuit break" by some traders, the pause halts trading for 45 minutes each weekday morning and is part of a larger reduction in trading hours by the Board of Trade to a 17.5-hour day.

The exchange, owned by CME Group Inc, cut trading of futures and options for crops like wheat, corn and soybeans from 21 hours after a move last year to extend activity hurt liquidity.

The exchange had a 2-hour-15-minute pause and a 17-hour trading day in place before it added hours last year.

Traders say a morning pause helps volume by gathering participants for the start of a new day and creating a sense of excitement in the markets.

However, once trading resumed after the break on Monday, "there wasn't a lot going on," said Mark Gavril, president of MSG Capital and a market maker in soybean options.

Gavril attributed the slow start to a lack of fresh news to trade on, saying "it's just a slow day overall."

The Board of Trade in May increased trading from 17 hours per session in response to a challenge from arch-rival IntercontinentalExchange, which launched electronic trading on a 22-hour basis.

Traders pushed the Board of Trade to shorten its schedule after ICE failed to attract much business. They complained the longer cycle spread out volume and reduced liquidity.

Under the new schedule, electronic trading runs from 7:00 p.m. CDT (2400 GMT) to 7:45 a.m. CDT (12:45 GMT) Sunday to Friday. Trading then stops until 8:30 a.m. CDT (1330 GMT) before resuming electronically and in Chicago's open-outcry pits until 1:15 p.m CDT (1815 GMT).

Under the previous schedule, electronic trading ran continuously from 5 p.m. to 2 p.m. CDT Sunday to Friday.


Data show 565 lots of corn traded hands in the minute after the start of the day session at 8:30 a.m., compared to 71 lots in the last minute of overnight session.

Monday's sluggish start fueled griping among traders, some of whom had hoped the Board of Trade would reinstate the 2-hour-15-minute morning break and 9:30 a.m. CDT (1430 GMT) opening that existed before the trading extension last year.

"We opened up and there really wasn't much there at 8:30," said P.J. Quaid, an independent broker in the corn options pit. "Some people are like, 'What are we doing here?'"

"In the long run, it's going to be better," he said. "You can't throw in the towel after the first day."

Activity perked up closer to 9:30 a.m. CDT, when 2,480 contracts of corn traded.


The Board of Trade has said the new schedule is a compromise among its diverse group of customers, who include farmers, exporters and hedge funds around the world.

A "good number" of traders surveyed by the Board of Trade wanted a pause of 2 hours and 15 minutes, according to a memo from the exchange.

Independent market makers and open-outcry traders wanted a shorter break, while some country elevators opposed any break because they wanted access to the market during the morning, the memo said.

Exchange executives were "likely elated" because rival ICE did not trade any corn contracts during the 45-minute break on Monday, said Rich Feltes, vice president of research for R.J. O'Brien.

A CME spokesman did not immediately have a comment.

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