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KCBT is "Concerned" about Inactivity

KCBT is "Concerned" about Inactivity

Although no panic buttons are being pushed yet, the Kansas City Board of Trade (KCBT) is getting increasingly worried about the recent lack of activity on its gas futures contract. There has been no estimated volume since July 29, and as a result, open interest has been stuck at 669 positions.

"We're talking to our customers, trying to find out how to bring them back to the trading floor," said Candice Bowman, vice president of marketing for the KCBT. "I've been here since trading started, and I can't remember a longer drought."

One Southwest trader, who wished to remain anonymous, said the problems go back farther than this past week. "For quite a while now, the only semi-liquid month has been the prompt month, which severely limits its usefulness," the trader said. Producers will look at it in as a pricing alternative, but often the offers they put up there are out of the market and therefore never get hit. It becomes somewhat useful during bidweek as a form of price discovery. I will look at where the prompt month is trading and that will give me an indication where I want to be in the market."

The recent situation is a far cry from February of 1998, when the KCBT continuously broke its own records for volume traded and open interest numbers. In that month, the KCBT open interest surpassed 9,000 and estimated volume reached over 700 (See Daily GPI, Feb 11).

KCBT gas futures were launched in August 1995. The contract has a delivery point of PG&E Transmission and Texas' Permian-Waha Hub in West Texas.

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