CME's push to launch 24/7 oil trading is running into resistance just days after its chief executive warned about crypto perpetual futures (or just crypto perps), turning the fight over always-on markets back toward traditional exchanges.
The Commodity Futures Trading Commission (CFTC), the U.S. derivatives regulator, is reportedly considering whether to block CME Group's plan for a round-the-clock crude oil contract, Bloomberg has learned, citing a senior agency official familiar with confidential deliberations.
- CME Group, the Chicago-based exchange operator behind some of the world's most important futures markets, said Thursday it planned to offer 24/7 trading for smaller crude oil and gold contracts.
- The new oil contract would be one-tenth the size of CME's existing Micro WTI futures contract and is slated for Aug. 30, while 1-ounce gold futures are set for 24/7 trading starting July 26.
But the regulator was caught off guard by the announcement. The official said round-the-clock trading may not be suitable for crude oil because it could worsen already sharp volatility during geopolitical stress, a concern that may justify withholding approval, Bloomberg reports.
Context
A week earlier, CME CEO Terry Duffy raised "grave concerns" about the CFTC clearing a path for the first crypto perps.
- The CFTC said at the time that it would review perps applications case by case and that some assets may not be suitable for the product.
CME argues that traders need regulated markets open when news breaks. Derek Sammann, CME's senior managing director and global head of commodities markets, said the new WTI and gold contracts would give traders regulated products that are "right-sized and available 24/7" so they can manage exposure whenever events move markets.
Oil isn't only a trader market. It's also a benchmark tied to fuel costs, airlines, refiners, producers and macro hedging, so a weekend or overnight panic around war news could spill into a market that already moves hard during geopolitical shocks.
In the meantime: NYSE owner ICE brings oil perps to OKX crypto exchange
Hyperliquid is still in the background
The crypto angle is hard to miss because CME and Intercontinental Exchange, the owner of the New York Stock Exchange, have already been pressing Washington to rein in Hyperliquid, a decentralized crypto perps exchange whose oil-linked products surged during the Iran conflict.
As The Coinformer previously reported, ICE and CME warned U.S. officials that Hyperliquid's oil-linked trading could distort prices or create risks around manipulation and sanctions evasion.
- In May alone, oil-linked markets on Hyperliquid generated about $6.9 billion in total volume.
- Almost all of it came from the Brent oil market, which did about $6.8 billion, while the other two oil markets together added only about $111.5 million, per data from analytics platform ASXN.
Hyperliquid supporters have argued that on-chain markets are more transparent because trades, liquidations and funding payments can be publicly verified.
Read also: Coinbase CEO says offshore crypto perps thrived on Americans using VPNs