Options market operator buys last independent U.S. grain exchange

MIH makes deal to buy Minneapolis' MGEX


Chicago | Reuters — Options exchange operator Miami International Holdings (MIH) will acquire the 139-year-old Minneapolis Grain Exchange, the last independent U.S. grain exchange, the organizations said in a statement on Friday.

Best known for its flagship hard red spring wheat futures contracts, the MGEX, founded as the Minneapolis Chamber of Commerce in 1881, will become a wholly owned subsidiary of MIH, pending approval by MGEX membership and regulators. The deal is expected to close late this year.

In Western Canada, MGEX’s hard red spring wheat futures are considered a benchmark for price discovery in Canada Western Red Spring (CWRS) wheat contracts.

The MGEX spring wheat futures market is smaller and far less liquid than the global benchmark, Chicago Board of Trade soft red winter wheat futures, operated by CME Group.

Open interest in MGEX spring wheat futures totaled 81,136 contracts as of Thursday, compared with 405,834 contracts for CBOT wheat.

MGEX shuttered its open-outcry futures trading pits in 2008, converting to fully electronic trade, although the exchange continued open-outcry trade in spring wheat options.

Yet the member-owned MGEX maintained its independence even after the CME Group bought the Kansas City Board of Trade, another wheat futures exchange, in 2012, and the Intercontinental Exchange (ICE) snapped up the Winnipeg Commodity Exchange in 2007.

MIH will maintain trading and clearing operations of the spring wheat contract while adding new futures products.

“MIH remains committed to maintaining and preserving MGEX’s heritage and existing operations, including with respect to the hard red spring wheat contracts,” MIH CEO Thomas Gallagher said in Friday’s statement.

Acquiring the Minneapolis exchange will allow MIH to clear its own products, a factor that made the MGEX attractive, said Austin Damiani, an independent trader and MGEX member.

“The regulatory barriers established by the Dodd-Frank Wall Street Reform Act… substantially increased the value of the MGEX as it made the establishment of a new exchange nearly impossible,” Damiani said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago. Includes files from Glacier FarmMedia Network staff.

CLARIFICATION from Reuters, Aug. 24, 2020: An earlier version of this article stated MGEX closed its open-outcry trading pits in 2008. The article now specifies that while MGEX’s spring wheat futures trading went fully electronic at that time, its spring wheat options are still traded by open-outcry as well as electronically.

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