CME under fire over cash for trades in Brent The biggest US futures exchange's campaign to break into North Sea oil has been marked by unusual trading patterns as computerised firms engineer ways to exploit a cash-for-volume scheme, according to market participants. CME Group has promised a pot of as much as $1m a month to the biggest traders in its upstart Nymex Brent crude futures contract, a June filing shows, as it attempts to wrest market share from ICE Futures Europe, the exchange that launched Brent in 1988. Nymex Brent futures CME volumes surge to record high CME and IntercontinentalExchange, owner of ICE Futures Europe, are aggressively competing for market share across energy contracts that are vital to profitability at both companies. The CME's Brent contract has been growing rapidly, but data show volume is concentrated in momentary bursts of trading in contracts for delivery several months in the future. Oil futures trading tends to focus on the first two or three months of delivery. Traders trace the activity to algorithms designed to generate incentive fees. "There's no economic benefit to the trades whatsoever, except for the people that at the end of the month get a cheque from the CME," said one participant in the incentive programme. The unusual patterns come as global regulators are closely examining the role of high-speed electronic trading in markets. In a June speech, Bart Chilton, commissioner at the US Commodity Futures Trading Commission, suggested high-speed traders pursuing exchange incentive programmes, such as the CME's, are creating "fantasy liquidity." He called on exchanges to stamp the practice out. CME has touted "excellent commercial participation" in its Brent contract, issuing a press release to mark record daily volume on August 12. On that day more than a third of volume came within 15 minutes just after 11am London time in the form of bets on the price "spread" between contracts for delivery in January and February 2014. January and February contracts accounted for 49 per cent of total volume. Similar heavy trading in far-ahead spreads has happened on several other days in recent weeks, data show. A person active in the CME Brent crude market said computer traders are focusing on spreads because they are lower risk. "They make no loss because they buy and sell at the same price," this person said. CME said: "We have rules in place to prohibit any inappropriate trades. Our market regulation division employs modern surveillance procedures to continually review trading activity in our markets and ensure integrity. It is not unusual for exchanges to reduce fees or other incentives to traders or market makers. ICE currently has incentive schemes to encourage trading in WTI crude, which is principally traded on Nymex. But ICE said its incentives differed from the cash scheme for Nymex Brent: "We do not offer any programs where a cash pool is offered to customers in exchange for trading volume."