10 NOVEMBER 2015
CIRCULAR 15/228
LONDON COCOA FUTURES, EURO COCOA FUTURES - IMPLEMENTATION OF
RULE CHANGES BEGINNING FROM MAY-17 DELIVERY
CATEGORY
Regulations
ATTACHMENTS
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The purpose of this Circular is to remind Members and their clients of the implementation timeline for the changes to
the Rules and Grading and Warehousekeeping Procedures with respect to London Cocoa Futures and Euro Cocoa
Futures, effective from the May-17 futures delivery month. The rule changes were notified to the market in circular
15/099 dated 12 May 2015. The new allowance and discounts applicable from May-17 are published on the ICE
website here.
Full contract Rules and Administrative Procedures, as well as the Grading and Warehousekeeping procedures, can
be found at the below links:
Contract Rules: ICE Futures London Cocoa Futures Contract
Procedures: ICE Futures London Cocoa Futures Contract
Contract Rules: ICE Futures Euro Cocoa Futures Contract
Procedures: ICE Futures Euro Cocoa Futures Contract
Grading and Warehousekeeping Procedures in respect of ICE London Cocoa and Robusta Coffee
Futures Contracts
Overview
Stocks with a valid grading result dated from 01 November 2016 onwards will be eligible for delivery against May-17
futures. From 01 November 2016, the Exchange will issue two sets of grading results for each unit graded. One set of
results will be applicable for units delivered up to and including to the March 2017 contract; the second set will be
applicable for units delivered from the May 2017 contract and onwards. Both the individual member grading the
cocoa and the public (via the ICE website) will see the two sets of results, with different levels of detail as appropriate
for the member and the public. The Exchange will also publish two sets of stock figures: one reporting stock valid for
the front month futures expiry, and one for the May-17 expiry. After the March 2017 expiry, we will revert to one set of
results and stock figures.
Summary of Rule Changes* and Implementation
*All Rule references are for London Cocoa Futures Contract EEEE. The rules are mirrored in the Euro Cocoa Futures Contract
EEEE1. The Grading and Warehousekeeping Procedures are referred to as G&WPs
1)
Adjustment to the Length of Cocoa Grading Certificates
For contract Months from and including May-17, grading certificate validity will be increased according to
Rule EEEE.3, shown below:
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(e) A Grading Result issued in respect of a Delivery Unit shall be valid (“Valid Grading Result”) if:
(i) the Delivery Unit has been graded as “tenderable”;
(ii) it has not expired; subject to Rule EEEE.3(f):
(B) For contract months from and including the May 2017 contract:
(1) In respect of Standard or Large Delivery Units, the Grading Result will expire
at the end of the sixth month after the date of issue of the first Grading Result
including any unexpired part of the month in which it was graded, or, at the end
of the twelfth month following the second and any subsequent grading including
any unexpired part of the month in which it was graded;
(2) In respect of Bulk Delivery Units, the Grading Result will expire at the end of
the twelfth month after the date of issue of the Grading Result including any
unexpired part of the month in which it was graded; and
Implementation: From 1 November 2016, all BDUs and SDU or LDU re-grades will receive a 12 month
(plus any unexpired part of the month) certificate.
2)
Adjustment to the Origin Group Allowance Table
According to Rule EEEE.4,
for contract Months from and including May-17, new origin groups and associated discounts will apply in
accordance with the schedule published here:
Implementation: The new origin groups will apply from the May-17 expiry, and will be reflected in the
second set of grading results from 01 November 2016.
3)
Removal of the Bulk Delivery Discount
For contract Months from and including May-17, the bulk discount in rule EEEE.6, shown below, will no
longer apply:
EEEE.6 (b) For contract months up to and excluding May 2017 only, subject to any other Allowances
specified in these Contract Rules or by the Valid Grading Result for a Delivery Unit:
(i) a Standard Delivery Unit or a Large Delivery Unit delivered under a Contract shall not be subject
to a discount; and
(ii) a Bulk Delivery Unit delivered under a Contract shall be subject to a Bulk Delivery Unit discount
of £20 per Tonne to the Contract price.
Implementation: The £20 discount will no longer be applied from May-17 to delivery invoices. This
discount does not factor into the grading results.
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ICE Futures Europe, a Recognised Investment Exchange under the Financial Services & Markets Act 2000
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4)
Introduction of Free Fatty Acid (FFA) Test and Allowance Table for Bulk units
According to Rule sections EEEE.4, EEEE.14, EEEE.15, and G&WP Sections D 2.9.7, E1.7.1, E2.2.5,
from the May-17 contract, BDUs will be subject to an FFA allowance according to the allowance table found
here.
Implementation: From 01 November 2016, all BDUs graded will be subject to an FFA test. The resulting
FFA allowance will be reflected in the second set of grading results from 1 Nov 2016.
5)
Adjustment to the Residue and Foreign Matter Allowance Table
According to G&WPs Section 2.2.1,
from the May-17 contract, an adjustment will be made to the Residue and Foreign Matter Allowance
according to the table found here.
Implementation: The new Residue and Foreign Matter Allowances will apply from the May-17 expiry, and
will be reflected in the second set of grading results from 01 November 2016.
6)
Adjustment to the Weight Loss Allowance table
From the May-17 contract, an adjustment will be made to Weight Allowances in accordance with Rule
EEEE.5, shown below:
(g) For contract months from and including May 2017, the Seller shall accept a deduction from the Contract
price in accordance with:
(i) for Delivery Units delivered within the first 183 days from the Original Weigh Date a weight
allowance will accrue at a rate of 0.5% per 183 days,
(ii) for Delivery Units delivered from 184 to 548 days after the Original Weigh Date, a weight
allowance will accrue at a rate of 0.5% per 365 days (in addition to any accrued allowance from the
first 183 days),
(iii) for Delivery Units delivered from 549 to 913 days after the Original Weigh Date, a weight
allowance will accrue at a rate of 0.25% per 365 days (in addition to any accrued allowance from
the first 548 days)
After 913 days after the Original Weigh Date, the total allowance of 1.25% will have been fully allocated and
the Delivery Unit will attract no further allowance.
Delivery Units may be re-weighed at any time. After re-weighing, the nominal weight loss will be calculated
from the Last Weigh Date rather than the Original Weigh Date, and
A summary of the new weight loss allowances can also be found in the table found here.
Implementation: The new calculation of weight allowance will apply to invoices from May-17 contract
deliveries onwards.
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ICE Futures Europe, a Recognised Investment Exchange under the Financial Services & Markets Act 2000
Registered in England & Wales with Registered Office at Milton Gate, 60 Chiswell Street, London, EC1Y 4SA Company Registration No. 1528617
Please ensure that the appropriate members of staff within your organisation and customers are advised of the
content of this Circular.
Signed
Patrick Davis
Company Secretary
FOR MORE INFORMATION, PLEASE CONTACT:
Toby Brandon
Director, Soft Commodity Operations
+44 (0)20 7012 8798
[email protected]
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ICE Futures Europe, a Recognised Investment Exchange under the Financial Services & Markets Act 2000
Registered in England & Wales with Registered Office at Milton Gate, 60 Chiswell Street, London, EC1Y 4SA Company Registration No. 1528617