Utilizing information from Data Transmission Network Corporation (DTN), the Minneapolis Grain Exchange (MGEX) announced Feb. 27 its plans to develop a new cash-settled futures contract.
The MGEX will utilize DTN resources from its 1,000-plus elevator database to calculate each day’s index price for outstanding contract positions. Cash-settled contracts differ from traditional futures contracts in that delivery is not an option; therefore, market participants can hold their outstanding futures positions until contract expiration without the threat of delivery. This also allows for simultaneous expiration of futures and options.
In addition to the new contract, the MGEX announced it will begin to develop an electronic trading platform through a partnership agreement with NIVITS, a Stockholm- and London-based electronic exchange design company.
Plans are to launch the electronic trading and cash-settled futures contract in third quarter 2001.