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CME Group Statement on PSI Analysis of Wheat Markets

Posted on: Wednesday, 24 June 2009, 09:35 CDT

CHICAGO, June 24 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange, today made the following announcement regarding the Permanent Subcommittee on Investigations' report on the performance of the CBOT Wheat futures contract:

"CME Group applauds government efforts to ensure effective regulation of commodity futures markets. Nevertheless, we disagree with the findings and recommendations in the Subcommittee Report, which is based on anecdotal information versus sound empirical and economic analysis. The Subcommittee Report is contradicted by four separate studies conducted by The Commodity Futures Trading Commission ("CFTC"), the Government Accountability Office ("GAO"), Informa Economics Inc. ("Informa") and CME Group - all of which concluded that there is no causality between market participation of index funds and non-commercial traders and wheat price levels or cash market convergence at expiration.

The CFTC, the GAO, Informa, and CME Group, all used in-depth market data to analyze how changes in the positions of index funds and other market participants are related to price changes, as well as the price differential between wheat cash and futures prices. Each study concluded that fundamental supply and demand factors related to crop failures, strong economic growth in many importing nations, acreage switching caused by demand for bio-fuels, and currency volatility have all been responsible for recent periods of increased volatility and price swings in commodity markets. CME Group is committed to working with regulators and government officials to ensure the effective functioning of our markets, as well as the ability of all market users to access our markets on a non-discriminatory basis for bona fide investing and portfolio management purposes.

CME Group, along with the CFTC and broader industry participants, have developed a number of steps to address convergence issues in the Wheat contract, including implementing seasonal storage rates, additional delivery territories, and reduced vomitoxin levels. These changes, which are being implemented beginning with the July 2009 contract, are expected to improve convergence between cash and futures prices."

CME Group (www.cmegroup.com) is the world's largest and most diverse derivatives exchange. Building on the heritage of CME, CBOT and NYMEX, CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on trading floors in Chicago and New York. By acting as the buyer to every seller and the seller to every buyer, CME Clearing virtually eliminates counterparty credit risk. CME Clearing also offers financial safeguards to help mitigate systemic risk, providing the security and confidence market participants need to operate, invest and grow. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, and alternative investment products such as weather and real estate. CME Group is listed on NASDAQ under the symbol "CME."

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at www.cmegroup.com.

CME-G

SOURCE CME Group

Source: PR Newswire

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