CBOT launches X-Funds

The Chicago Board of Trade (CBOT) today launched X-Funds, short-duration futures contracts that track the performance of a professionally selected index.

X-Funds have a two-week cash-settled cycle and are based on funds consisting of four domestic futures contracts. The initial two X-Funds are linked to a mixture of long and short commodities, and two- and ten-year notes.The X-Funds index will initially be set at a base value of 100 with each point on the index being valued at $1,000, giving it a theoretical value of $100,000. The contracts will trade in CBOT’s open auction market-place.

The next two X-Fund index components will go public on the CBOT’s website on February 28, the day before the next trading cycle begins on March 1. Another three will go live on April 12. “Although the initial CBOT X-Fund components will only include a mix of CBOT futures contracts, CBOT X-Funds introduced at a later date may include contracts from other domestic US derivatives exchanges,” said Nickolas Neubauer, chairman of the CBOT.The CBOT said the dynamic reconfiguring of the index marks a departure from traditional indexes that typically remain static for long periods of time. It claimed the X-Funds will offer participants easy access to low-cost index futures products with lower margins and enhanced leveraging opportunities.