CME Group selects Fastmarkets as PRA for its new cash-settled cobalt futures contract
Cross-commodity price reporting agency Fastmarkets today announced that CME Group chose it as the PRA for its new cash-settled cobalt futures contract. The new contract is set to launch on December 14, pending regulatory review.
The new contract will be listed on and subject to the rules of COMEX and settled against the benchmark daily standard-grade cobalt price assessed by Fastmarkets.
The growing size of the cobalt market, alongside volatility in prices, underscores the need for and value of a hedging mechanism. CME Group will offer this hedging mechanism settled against the following Fastmarkets price:
- Cobalt standard grade, in-whs Rotterdam, $/lb
- Fastmarkets price code: MB-CO-0005
- Bloomberg Ticker: MB071071
The final settlement price will be an arithmetic average of the daily Fastmarkets standard-grade cobalt (midpoint) price.
The launch of the contract builds on growing participation in OTC trades, which are cash-settled against Fastmarkets’ cobalt price assessments. Key market participants have endorsed the exchange’s partnership with Fastmarkets as a critical step in the evolution of risk management solutions for the cobalt market.
“As zero-emission policies continue to grow globally, clients are looking for more effective ways to manage the price risk associated with electric transportation,” said Young-Jin Chang, Managing Director and Global Head of Metal Products at CME Group. “This new product will also provide a forward curve for the cobalt market, creating more transparency around a key metal in the green economy.”
Fastmarkets has invested significantly in resources and technology to ensure its price-assessment process aligns with IOSCO principles. The Fastmarkets daily standard-grade cobalt price was validated over a 12-month period in September 2019. It then received a 12-month re-validation in September 2020.