IntercontinentalExchange (ICE) moved a step closer to the launch of its long-awaited global cotton futures contract on Wednesday, after a U.S. congressional committee voted to remove one of the last hurdles standing in its way.
The U.S. House Agriculture Committee approved a bill to allow U.S. futures exchanges, such as ICE, to handle foreign-grown cotton at delivery points around the world, the committee said in a statement.
Currently, the U.S. Cotton Futures Act requires all cotton tendered against a U.S.-listed cotton futures contract to be sampled and graded by the U.S. Department of Agriculture.
ICE has been pushing its new global contract for years but the law has forced it to fall behind its intended timetable. The exchange said in October 2014 it was aiming for the first quarter of 2015, and recently threatened to list the contract elsewhere due to the law.
The new contract’s supporters say the existing No. 2 contract <0#CT:>, which only accepts cotton grown in the United States but is nonetheless considered the global benchmark, is increasingly vulnerable to price-distorting squeezes.
The bill would still need to be approved by the full House and the Senate before becoming law. ICE declined to comment on the committee’s approval of the bill. (Reporting By Luc Cohen; Editing by Tom Brown)