What is a call rule?

Call rule is a law that binds the commodity market that states that the price of the commodity at the beginning of the trading day should be similar to the IRS at the end of the previous day. This prevents the price of the commodity to distort the trading commodity after hours, ensuring a solid competition in the open market. In the United States, the call rule was set by the Supreme Court in the 1918 decision. With this rule, traders can be assured that the initial price of the commodity will be very closely close to the final price of the previous day.

commodities are the driving force of the futures market in which traders close prices for physical products to be delivered in the future. There were times when powerful entities dominated in this market that could move market prices of specific commodities with trading in the lessons when the open market was closed. The call rule has removed a large part of the impact of this trading after hours.

Call rule ensures that the final price in one day of a particular commodity and the initial price followedThe day is almost the same. This means that all traders who want to buy or sell commodity on the futures market after hours must keep the price. It reduces market volatility and helps to ensure that traders without special connections have the same competitive advantage as anyone else.

Before the start of the call rule, some major players on the market could affect commodity prices by purchasing in hours. They would be offered favorable prices that were better than prices that were provided to those who buy commodities during the day. As a result, the balance of supply and demand would be upset, changing prices overnight. New prices would force ordinary traders to pay the bonus for what merchants edit after hours with a discount.

This practice was suspended when the Chicago Board of Trade adopted the call rule in 1906. The Supreme Court of the United States eventually received this case in 1918 and decided in favor of the Council and confirmed this rule. In decisionThe judges found that the rule was truly competitive and confirmed the so -called "Rule of Reason", which essentially claims that specific circumstances surrounding certain aspects of trade should be the driving force of any restriction specified to this trade.