CME Group Adjusted Interest Rate Total Return Futures Reach Record Open Interest, Volume

Rhea-AI Summary

CME Group, a premier derivatives marketplace, reported record open interest (OI) for its Adjusted Interest Rate (AIR) Total Return futures, hitting 503,000 contracts on May 22, 2024. Year-to-date average daily volume is 8,200 contracts, a 78% increase from the previous year.

The average OI for 2024 stands at 430,000 contracts, up 25% year over year, with an equivalent equity index notional value exceeding $138 billion, a 40% increase. On May 14, there were 42 large OI holders, defined as participants holding 1,000 or more contracts.

AIR Total Return futures cover major indices, including S&P 500, Nasdaq-100, Russell 1000, Russell 2000, Dow Jones Industrial Average, and the FTSE 100. The increased interest showcases the demand for efficient risk management solutions in a volatile interest rate landscape.

Positive

• Record open interest of 503,000 contracts for AIR Total Return futures.
• Average daily volume for AIR Total Return futures up 78% year over year.
• Average open interest of 430,000 contracts, a 25% increase year over year.
• Equivalent equity index notional value exceeds $138 billion, a 40% rise.
• Record 42 large open interest holders as of May 14.

Negative

• None.

Insights

Financial Analyst

CME Group has achieved remarkable growth in their Adjusted Interest Rate (AIR) Total Return futures, setting a record open interest (OI) of 503,000 contracts. This indicates significant investor interest and confidence. Open Interest, a measure of the total number of outstanding derivative contracts, is important for assessing market activity and liquidity. An OI of this magnitude demonstrates robust participation and deeper market liquidity, making these products more attractive to institutional investors.

The year-over-year increase in average daily volume (ADV) by 78% to 8,200 contracts shows growing usage and acceptance of these futures as efficient tools for interest rate management. Higher ADV generally implies better liquidity, reducing the cost of entering and exiting positions.

Additionally, the OI equivalent to $138 billion in equity index notional value, up 40%, signifies substantial engagement with these products. This can be beneficial for portfolio managers looking to hedge or gain exposure to equity indices without directly trading the underlying securities, offering a more cost-effective and liquid alternative.

Retail investors should note that such strong performance typically suggests institutional confidence in CME Group's offerings, potentially leading to further innovations and growth in their product suite.

Market Research Analyst

The surge in AIR Total Return futures usage underscores a strategic shift from over-the-counter (OTC) products to on-exchange traded futures. One primary advantage here is the increased pricing transparency that exchanges like CME provide. In contrast to OTC markets, where deals can be opaque, exchange-traded products offer clear pricing and standardized contracts.

Moreover, the growth in the number of large open interest holders to a record 42 indicates rising institutional interest. Large holders typically include hedge funds, asset managers and other institutional players who require efficient and transparent tools for managing risk. This trend could attract further institutional flows, enhancing market depth and stability.

The availability of AIR Total Return futures across major indices like the S&P 500, Nasdaq-100 and FTSE 100 means these products cater to a wide range of investor needs, providing versatile tools for different market conditions.

Retail investors should take into account that increased institutional participation often leads to better liquidity and tighter spreads, which can be beneficial even for smaller participants.

Tech Expert

CME Group's technological infrastructure, such as the CME Globex platform, plays a significant role in supporting the high volume and open interest of AIR Total Return futures. The scalability and reliability of such a platform are important for handling large trading volumes and ensuring seamless transactions. The commitment to providing a robust trading environment might contribute to investor confidence and the subsequent growth in usage of these derivatives.

The integration of various trading platforms like BrokerTec and EBS for different asset classes also indicates CME Group’s comprehensive approach to addressing the diverse needs of market participants. This interoperability can enhance the overall trading experience, providing efficiency and reliability.

For retail investors, understanding the technological underpinnings can provide assurance regarding the stability and reliability of the trading process. A well-established and reliable trading infrastructure tends to attract higher volumes, leading to better pricing and execution, which indirectly benefits all market participants.

CHICAGO, May 24, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced that its suite of Adjusted Interest Rate (AIR) Total Return futures reached an open interest (OI) record of 503,000 contracts on May 22.

In addition, AIR Total Return futures average daily volume stands at 8,200 contracts for 2024, up a record 78% year over year.

"As market participants continue to navigate a changing interest rate environment, they are increasingly looking for products that provide critical cost savings and flexibility to manage their risk," said Paul Woolman, Global Head of Equity Products at CME Group. "Our suite of AIR Total Return futures provide an effective and cost-efficient alternative to OTC equivalents, all with the added benefits of pricing transparency and deep liquidity that come with on-exchange trading."

Additional trading highlights for AIR Total Return futures year-to-date include:

• Average OI is 430,000 contracts, up 25% year over year.
• OI represents more than $138 billion in equivalent equity index notional value, an increase of 40% year over year.
• Record 42 large open interest holders on May 14 (defined by participants holding 1,000 or more contracts).

AIR Total Return futures are available across a range of major global indices – S&P 500, Nasdaq-100, Russell 1000, Russell 2000, Dow Jones Industrial Average, and the FTSE 100.

For more information, visit www.cmegroup.com/airtrf.

As the world's leading derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing. 

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc.  CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the S&P 500 Index are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

CME-G

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SOURCE CME Group

FAQ

What is the record open interest for CME Group's AIR Total Return futures?

The record open interest for CME Group's AIR Total Return futures reached 503,000 contracts on May 22, 2024.

How has the average daily volume for AIR Total Return futures changed in 2024?

The average daily volume for AIR Total Return futures in 2024 has increased by 78% year over year, now standing at 8,200 contracts.

What is the year-to-date average open interest for AIR Total Return futures in 2024?

The year-to-date average open interest for AIR Total Return futures in 2024 is 430,000 contracts, a 25% increase from the previous year.

What is the equivalent equity index notional value for CME Group's AIR Total Return futures?

The equivalent equity index notional value for CME Group's AIR Total Return futures exceeds $138 billion, marking a 40% increase year over year.

How many large open interest holders were recorded for AIR Total Return futures on May 14, 2024?

On May 14, 2024, there were 42 large open interest holders for AIR Total Return futures, defined as those holding 1,000 or more contracts.