NDLI: Market competition in crude oil futures (2008).

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Market competition in crude oil futures (2008).

Content Provider	CiteSeerX
Author	Skouratova, Elena Tse, Yiuman Martinez, Valeria
Abstract	On February 3, 2006 the ICE Futures introduced electronic trading of West Texas Intermediate (WTI) crude oil futures contracts that compete directly with the NYMEX benchmark light, sweet crude oil contracts traded on the floor. In response to ICE’s electronic contract, on September 5, 2006 the New York Mercantile Exchange (NYMEX) launched electronic trading of their standard-size crude oil futures contracts on the Chicago Mercantile Exchange’s (CME) Globex electronic trading platform. We analyze market quality conditions before and after the introduction of the NYMEX full-size crude oil contracts. We find price clustering of floor-traded regular-size NYMEX futures significantly improved after introduction of parallel electronic trading, indicating lower trading costs and better market quality. Price discovery analysis revealed that electronically traded futures contracts contribute similarly to fundamental value determination, open-outcry trading provides little price discovery. The research provides insights into the importance of regulatory parity between US exchanges and non-regulated markets.
File Format	PDF
Publisher Date	2008-01-01
Access Restriction	Open
Subject Keyword	Market Competition Crude Oil Future Electronic Trading Future Contract Market Quality New York Mercantile Exchange Globex Electronic Trading Platform Nymex Full-size Crude Oil Contract Ice Future Trading Cost Non-regulated Market Open-outcry Trading Fundamental Value Determination Sweet Crude Oil Contract Market Quality Condition U Exchange Standard-size Crude Oil Future Contract Ice Electronic Contract Little Price Discovery Nymex Benchmark Light Floor-traded Regular-size Nymex Future Price Discovery Analysis Parallel Electronic Trading West Texas Intermediate Regulatory Parity Oil Future Contract Price Clustering Chicago Mercantile Exchange
Content Type	Text

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