WASHINGTON – The US Government Accountability Office (GAO) accepted a request by the Senate Judiciary Committee to review cattle pricing, including the impact of high-frequency trading on cattle futures contracts, Reuters reported. The committee made the request in April.
Livestock groups requested a formal investigation into the volatility in live cattle futures. R-CALF said that market fundamentals supported historically high cattle and beef prices in 2014 and the first half of 2015. However, cattle prices inexplicably collapsed in the second half of 2015.
The National Cattlemen’s Beef Association (NCBA) expressed concerns about high-frequency trading on the Chicago Mercantile Exchange (CME) and requested reforms such as limits on messaging for livestock contracts; a one-second delay between trade actions among other reforms.
In February, the CME Group implemented new rules aimed at enhancing livestock market trading. The new measures include reduced trading hours and adding livestock contracts to the CME Globex Messaging Efficiency Program, which caps the number of trades actually executed.