![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
US single-stock futures venture lists more tradeable indexes
OneChicago, a joint venture of the three main Chicago derivatives exchanges formed in May 2001 to offer an electronic market for stock futures products in the US, has added seven 'narrow-based' equity indexes to an original eight it unveiled in March.
Like single-stock futures on individual stocks, narrow-based indexes could appeal to investors looking to take quick, leveraged long or short positions on US economic sectors. The margin requirement for US stock futures is 20%, and there is no rule prohibiting shorting a stock in falling markets, such as that which has frustrated the trading activities of market bears on the New York Stock Exchange.
As with any new exchange-traded derivative, the test for US stock futures will be whether liquidity will build up quickly enough to attract investors who trade in size. Trading large positions in relatively illiquid markets is expensive.
According to OneChicago, constituents in the indexes were selected for their correlation to the wider industrial sector equity indexes of which they may be a part.
OneChicago also considered whether at least one of the constituents in an index could meet requirements to become listed as individual single-stock futures. This is important to the exchange as it sees strong demand from investors to trade at least one constituent of an index, say a future on Bank One, against the index itself. This variant of pairs trading would involve a bet that a company would rise or fall in value against other peers in its sector. Not all the announced narrow-based indexes as yet have listed futures for any of their constituent elements. That will come later, said a OneChicago official.
The original eight OneChicago indexes were airlines, biotechs, computers, defence, investment banking, oil services, retail and semiconductor components.
OneChicago may still add as many as five more narrow-based indexes by the time US stock futures trading through OneChicago start trading in October. Final US regulations concerning stock futures trading do not become effective until September 13.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Exchanges
Asia’s ETF assets on the rise – HKEX presents the results of Asia ETF survey 2019
Asia’s total ETF assets surged by 23.9% in the first half of 2019 thanks to an increasing adoption of ETFs into investment portfolios. According to a survey conducted by Hong Kong Exchanges and Clearing (HKEX), asset expansion in Asia’s ETF market is set…
NYSE Offers Exchange-Calculated Bitcoin Index, with More to Come
NYXBT will initially be based off data from Coinbase Exchange.
Deutsche Börse to set up Europe's first multi-asset RMB platform
German exchange group signs joint venture deal with CFFEX and Shanghai Stock Exchange
Exchange Revenue Figures Rise, Fall; Data Revenues Continue Steady Increase
A mostly positive mix of Q1 results also yield big increases in data revenues for some exchanges.
Lift-off for ASX Aussie dollar swap clearing business
Volumes jump following revamp of Sydney bourse's clearing incentive scheme
Exchange Data Revenues Make Positive Start to 2015
Acquisitions made up for some shortfalls in exchange revenues
CME looks to local banks for FX liquidity in emerging markets
Chicago-based exchange targets China, India and LatAm growth