AGREX

AGREX (Agricultural Derivatives Exchange) is the new Agricultural Commodity Derivatives segment of IDEM.

Currently Durum Wheat Futures are listed on AGREX. Durum wheat is primarily used to produce pasta in Europe and couscous in North Africa and the Middle East.

Supply variations can create extreme price volatility for durum wheat. Durum Wheat Futures allow operators within the industry to mitigate risk by hedging their positions, promoting better business planning and greater operational profitability, whilst increasing price transparency.

Product Characteristics

  • Underlying: Sound, fair and marketable durum wheat of any origin. In compliance with EU sanitary requirements for grain for human consumption
  • Contract Size: 50 metric tons
  • Price Quotation: €/metric ton, market price does not include VAT
  • Tick: 0.25 €/t
  • Delivery Months: March, May, September, December. There are 5 Expiries traded in the market
  • Trading Hours: 2.30 pm – 5.40pm
  • Deliverable Specifications: Specific weight: 76.00 kg/hl min, Protein content: 11.5% min, Moisture content: 13.5% max, Impurities: 2% max, Vitreous grains: 62% min, Sprouted grains: 2% max, Mottled grains: 12% max, Broken grains: 6% max, Other cereals: 3% max, Grains affected with fusariosis: 0.5% max
  • Delivery Points: Authorized Silos: currently there is  one authorized Silo  nearby Foggia.
  • Expiry Date: 10th calendar day of delivery month (T). If the 10th calendar day is a non-trading day, the expiry is on the next trading day of the month
  • First Delivery Date: 4th trading day after expiry (T+4)
  • Last Delivery Date: 10th trading day after expiry (T+10)
  • Laboratory for Analysis: A.G.E.R. Bologna
  • Settlement Price: Borsa Italiana sets the settlement price as the last settlement price calculated by CC&G
  • Position Limits: There are three levels of position limits: current expiry, following expiries and all expiries together

AGREX: the right market for every type of participant

Each market participant of AGREX has a specific objective, and Durum Wheat Futures allow these diverse objectives to be met by offering the below benefits to each party:

  • Wheat Producers: AGREX futures can be used as a method for pricing crops that are yet to be produced, limiting exposure to adverse price movements and allowing operators to focus on production management.
  • Millers/Food Companies: Durum Wheat futures can be a useful Risk Management tool that helps to stabilize costs, allowing companies to fix future margins.
  • Financial Players/Traders: AGREX enables financial players benefit from exposure to investment opportunities in the agricultural industry without the need for a direct link to farming or food production. AGREX also allows financial institutions to offer several services to final users such as hedging, clearing and market access.

Trading and Order Types

Trading on AGREX takes place on the SOLA platform which is the same platform that is used for the Derivatives market, IDEM. AGREX provides members with several types of orders to enter, modify or cancel on the electronic order book and every type of order can be sent out with specific features for execution criteria. Orders are always processed according to price/time priority criteria.

  • Single Order: Buy/sell order sent to the market specifying a price limit.
  • Stop Order: an event-driven order remaining inactive until the price of the underlying contract reaches the ‘trigger price’. Stop-loss orders become active when the market price is equal or higher than (or equal to  and lower than) the trigger price.
  • Iceberg Order: Orders with limited disclosed quantity to be filled. Once the displayed quantity is filled, a new order is generated with the same partial displayed quantity-or with the remaining quantity-with the same price level as the original order, but with new time priority.
  • Market Maker Quotes: Buy/sell orders inserted by market makers, according to their obligations.
  • Committed Cross Order: Aimed at the conclusion of a contract in which the counterparties are predetermined, and where the set price is included within the order book price spread.
  • Internal Cross Order: Aimed at the conclusion of a contract where both counterparties are formed by the single operator who entered the order, and where the set price is included within the order book price spread.
  • Block Order: Committed and Cross orders can be entered at a price outside the order book price spread if the contract quantity is equal or greater than 100.

Market Making

In order to improve the liquidity of AGREX, Borsa Italiana may provide for the intervention of market markers. Types of market makers are:

  • Primary Market Makers: Required to display bids and offers on a continuous basis on all expiries, until the last trading day.
  • Liquidity Providers: Required to display bids and offers on a continuous basis on all expiries, until T-6 (included), where T is the last trading day.

In displaying the bids and offers and in responding to request for quotation, Primary Market Makers, and Liquidity Providers must display a minimum quantity of 3 contracts with a maximum spread of 8€ for the first 4 expiries and 10€ for the 5th expiry.

The quotation obligations shall begin at 14.30 and end at 17.40. Primary Market Makers and Liquidity Providers are required to restore their quotations within two minutes of a hit on the book.