the Kansas City Board 0 of Trade (KCBT) launched a Western Natural Gas Futures contract. Despite its short trading history, the contract is widely recognized as a success.
Trading during the first three contract months totaled 49,904 contracts, more than two times the 22,481 contracts that traded during the equivalent NYMEX trading period in 1990. Open interest in the KCBT contract soared as well. On October 19, 1995, open interest leapt past the milestone 5,000-contract mark to a total of 5,158 contracts at the end of the session's trade. Until recently the threshold for receiving a full listing in The Wall Street Journal, the 5,000-contract level is significant because it is viewed as the mark of success for a new futures contract.
Until recently the threshold for receiving a full listing in
The Wall Street Journal. . .
Markets Becoming Regional
The success of the KCBT Western Natural Gas Futures contract defies the odds: Over 75 percent of all new futures contracts fail, and second contracts on a successful commodity have an even worse track record. The reason for KCBT's success lies in the regional evolution of the natural gas industry. During the early 1990s, pipeline debottlenecking and expansion projects in the East led to a growing stability of the Eastern basis-the relationship between cash prices and the futures price.