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CME Launches FX Micro Contracts

CME Group is aiming to broaden its customer base with the launch of a series of new contracts aimed at retail traders and investors.

The exchange is set to launch Forex E-micros, designed to enable retail traders and investors to cost-effectively access the security, transparency and liquidity of CME Group’s FX products, later this quarter. The contracts are listed with, and subject to, the rules and regulations of CME.

“Our new Forex E-micro futures contracts provide the opportunity for a broader universe of customers to mitigate their counterparty risk by trading FX in CME’s $100 billion-a-day global FX liquidity pool,” says Derek Sammann, CME Group managing director, global head of FX products.

“Active individual traders looking to participate in the global FX market, or small businesses seeking a cost-effective hedging tool for their FX risk, can choose Forex E-micro futures as a versatile and accessible new resource to manage their exposure. And they can do this with the full investor safeguards of operating in CME Group’s regulated environment while benefiting from the transparency and deep liquidity offered by our futures market,” Sammann says.  

Christopher Larkin, vice president of E*Trade Securities, adds: “With the emergence of FX as a global asset class and the ever-present need to manage FX risk, futures customers will gain access to the global FX markets in a cost-effective, secure manner.”

The Forex E-micro contracts are one-tenth the size of the corresponding CME FX contracts and will be traded on the CME Globex electronic trading platform. They will be quoted in interbank terms, making it easy for customers to integrate them into their systems and portfolios. Contracts will be launched in six currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/JPY, USD/CHF and USD/CAD.

All contracts will be cash-settled and EUR/USD, GBP/USD and AUD/USD contacts will be fully fungible with CME Group’s full-sized FX contracts, and margins and exchange fees will be scaled down in proportion with the full-sized versions at roughly one-tenth of the full cost.  USD/JPY, USD/CHF and USD/CAD all have a high percentage of margin offset with the larger CME Group FX contracts.

The addition of the Forex E-micro contracts means the CME FX product suite will consist of 49 futures contracts and 32 options contracts based on 20 currencies.  

“With Forex E-micro futures traded at CME, for the first time we will be able to offer our customers the standards of security and pricing they deserve when entering into a new asset class for the first time,” says Greg Sabatello, president and CEO, Transaction Futures.

“Electronically traded and cleared via a central counterparty, these new products ensure on a globally recognised legitimate exchange with transparent fees, which should appeal to spot traders.”  

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