Comment Text:
Convergence is a requirement for efficient markets, and it makes sense to put into place market triggers that help ensure that convergence is discovered. Three years to review the contract is too long to make changes to a contract to help ensure that convergence is realized.
VSR has worked in SRW as well as the HRW wheat contracts. I feel that a hybrid model of VSR - one that has one calculation period per market year instead of multiple calculation peroids makes sense to ensure convergence. Using the CZ-CH and SX-SF to increase (>80% full carry), stay the same (50%-80% full carry, or decrease (<50% full carry) storage rates with a minimum of 8c/bu/mo make sense for the marketing year for Corn and Soybean futures. This method would also be less complex than VSR.
