CME Group to Launch Longer-Dated Event Contracts on January 29

Rhea-AI Summary

CME Group (CME) to Launch Event Contracts for E-mini S&P 500 and E-mini Nasdaq-100 Futures, Providing Traders with Unique Market Views

Insights

Market Research Analyst

The introduction of quarter- and year-end expiries for E-mini S&P 500 and E-mini Nasdaq-100 futures by the CME Group represents a significant expansion of financial instruments available to traders. These contracts allow market participants to hedge against or speculate on future movements of the underlying equity indices over longer periods. This could potentially increase liquidity and provide more flexibility in managing portfolio risk.

Historically, the E-mini contracts have been used extensively for shorter-term trading. The introduction of longer-dated expiries aligns with a broader industry trend towards offering more diverse derivative products, catering to a wider range of investment horizons and risk management strategies. As these contracts are expected to be used for both hedging and speculative purposes, they may contribute to a more efficient price discovery process and offer additional avenues for investors to align their trading with macroeconomic cycles.

Financial Analyst

The launch of these event contracts could have implications for the overall derivatives market and the underlying stocks within the S&P 500 and Nasdaq-100 indices. For instance, if a significant number of traders use these contracts to take positions on the future direction of the market, this could lead to increased volatility around the expiry dates of these contracts. Investors and companies will need to be aware of this potential volatility when planning their financial strategies.

From a financial perspective, the availability of these contracts may also attract a new segment of institutional investors who prefer longer-term hedging and investment strategies. This could lead to an increase in trading volumes and potentially more revenues for CME Group. However, the success of these contracts will depend on their adoption by the market and whether they meet the needs of traders looking for longer-dated hedging options.

Economist

The strategic timing of these contract expiries at quarter- and year-end is particularly relevant from an economic perspective. These periods often coincide with increased market activity due to the release of economic data, earnings reports and portfolio rebalancing by institutional investors. By providing a structured product that specifically targets these intervals, CME Group is enabling traders to more directly engage with the economic cycle's rhythm.

Additionally, the availability of such contracts could influence the behavior of market participants, potentially leading to a more proactive approach to risk management and speculation around key economic announcements. Over time, this could contribute to a more dynamic and responsive market ecosystem, as traders adjust their strategies to leverage the predictive nature of these longer-horizon contracts.

• For the first time, traders will be able to express a view on where E-mini S&P 500 and E-mini Nasdaq-100 futures will settle at the end of every quarter and year

CHICAGO, Jan. 9, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced it will launch event contracts with quarter- and year-end expiries for E-mini S&P 500 and E-mini Nasdaq-100 futures on January 29, pending regulatory review. The new longer-horizon contracts will provide market users with another unique opportunity to express their views on the direction of these equity indices.  

"Event contracts on E-mini S&P 500 and E-mini Nasdaq-100 futures are among the most highly traded of our event product suite, representing 33% and 20% of the volume, respectively," said Tim McCourt, Global Head of Financial & OTC Products at CME Group. "These new contracts featuring longer expiries at quarter- and year-end will give traders a way to express their views on market direction at key economic-cycle intervals – with the added benefit of more opportunities to trade in and out of a position leading up to expiry. We're pleased that our expanded suite of event contracts will continue to provide innovative, lower-cost tools for participating in CME Group's futures markets."

"We are excited to see the growth of the CME Group's event contracts offering," said Ryan Duckworth, CEO of Akuna Capital – U.S. "The quarterly and annual contracts will give investors the opportunity to choose the best time frame for their strategies without worrying about opening a new position daily. We are honored to be a part of CME Group's success as a liquidity provider in event contracts."

"We are pleased to support CME Group's launch of longer-dated event contracts on E-mini S&P 500 and E-mini Nasdaq-100 futures," said Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers. "Event contracts give investors a simple way to access key futures markets, and our active trader clients seeking to trade event contracts on these popular equity indices will benefit from the greater flexibility offered by the new quarter- and year-end expiries."

"NinjaTrader is excited to continue its support for CME Group's evolving event contract product suite," said Martin Franchi, CEO of NinjaTrader. "We are confident in the market appeal of these products, which offer both a cost-effective and straightforward way for retail traders to access dynamic financial markets. This evolution of the product suite will continue to broaden the appeal of these new and innovative products."

CME Group event contracts enable individuals to take a position on up or down price moves in some of the world's most widely quoted benchmark futures markets with the certainty of knowing their maximum potential profit or loss when placing a trade. Also effective January 29, the maximum payout for event contracts will be $100.

CME Group event contracts are listed with and subject to the rules of CME. For more information on this product, please see: www.cmegroup.com/ecfaq.

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.

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SOURCE CME Group

FAQ

What is the latest announcement from CME Group?

CME Group will launch event contracts with quarter- and year-end expiries for E-mini S&P 500 and E-mini Nasdaq-100 futures on January 29, pending regulatory review.

Who is the Global Head of Financial & OTC Products at CME Group?

Tim McCourt is the Global Head of Financial & OTC Products at CME Group.

What percentage of the volume do event contracts on E-mini S&P 500 and E-mini Nasdaq-100 futures represent?

Event contracts on E-mini S&P 500 and E-mini Nasdaq-100 futures represent 33% and 20% of the volume, respectively.

What are the benefits of the new longer-horizon contracts?

The new longer-horizon contracts will provide market users with another unique opportunity to express their views on the direction of these equity indices.

Who is the CEO of Akuna Capital – U.S. and what is their opinion on the new contracts?

Ryan Duckworth is the CEO of Akuna Capital – U.S. and is excited to see the growth of the CME Group's event contracts offering, stating that the quarterly and annual contracts will give investors the opportunity to choose the best time frame for their strategies without worrying.