New for Traders: Week ending Oct. 19

Commodities

  • CME Group announced it has reached a definitive agreement to acquire the Kansas City Board of Trade (KCBT) for $126 million in cash and a distribution of excess cash to members. CME Group agreed to keep the trading floor open for at least six months and will maintain a committee of KCBT participants to advise on hard red winter wheat contract terms and conditions for at least three years. CME Group CEO Phupinder Gill says, “This transaction will produce cross-margining benefits and other capital efficiencies."
  • CME Group will increase the daily price limits for nonfat dry milk futures to 4¢ per pound, with an expandable limit of 8¢. The price limits for dry whey futures have also increased, to 6¢ per pound for daily price limits and 12¢ for expandable limits.
  • Friday will be the last day of trading in InterContinental Exchange Inc.’s Manhattan-based open-outcry commodities trading pits.
  • Argentina’s Rosario Futures Exchange began trading of futures and options on Chicago corn.

Regulation

  • The Commodity Futures Trading Commission (CFTC) extended the deadline for market participants to determine if certain commodities fall under Dodd-Frank’s definition of a “swap,” “swap dealer” or “major swap participant” when converting them from swaps to futures contracts. The extensions affect agricultural and exempt commodities, foreign exchange forwards and swaps and certain foreign entities.
  • Newedge was appointed the exclusive swap counterparty to the EEA Fund Management Ltd.’s Diversified Trend fund. The Irish-based fund has been authorized as compliant with the Undertakings for Collective Investment in Transferable Securities (UCITS) directive.
  • The CFTC approved ICE Clear Europe’s request to allow the clearing house and its members to hold U.S. energy futures and foreign energy futures in the 4d(a) account for U.S. customers. The agency’s decision will allow ICE to continue offering portfolio margining offsets for its energy clients, with enhanced account segregation benefits.

Options

  • InterContinental Exchange Inc. licensed Markit’s North American and European corporate credit default swap indexes, with the aim of developing futures and options contracts based on Markit’s CDX and iTraxx index families.
  • The Options Industry Council (OIC) and the Shanghai Association for International Exchange of Personnel signed a memorandum of understanding to strengthen cooperation on options research and education.
  • The CBOE Futures Exchange (CFE) plans to launch its S&P 500 Variance futures later this quarter. Similar to over-the-counter (OTC) variance swaps, the contract will allow users to trade the difference between the implied and realized variance of the S&P 500 Index. The CFE also plans to introduce a Lead Market Maker Program for the futures.
  • The Options Industry Council (OIC) announced that its Investor Education Day will be held Sept. 29 in San Francisco. The event includes an Options Basics track, which focuses on fundamentals, and an Advanced Strategies course that teaches more complex concepts such as butterflies, condors and the Greeks.

Financials

  • On Oct. 25, CME Group will host a live webcast about Deliverable Interest Rate Swap Futures, which will address topics including delivery processes, flexible execution choices, counterparty credit risk mitigation and ways to save using futures-style margining and risk offsets.
  • CME Group received regulatory approval to offer portfolio margining of over-the-counter interest rate swap positions and Eurodollar and Treasury futures for customer accounts, beginning Nov. 19. The new program is designed to reduce risk and increase capital efficiency for some portfolios.
  • SwapClear, the interest rate swap clearing service from LCH.Clearnet, launched the industry’s first certification program for consultancy firms preparing market participants for the implementation of centralized OTC clearing.
  • CME Group announced the launch of Chinese Steel Rebar HRB400 (Mysteel) Swap Futures, which will begin trading on Oct. 15. In January, CME Group partnered with Mysteel, China’s leading provider of ferrous price and indexing services, to develop risk management products for the ferrous industry; this will be the first product listed by a CME Group exchange based in Mysteel’s price data services.
  • The CME Group will launch its deliverable interest rate swap futures contracts on Nov. 13. The contracts, which will be listed on the Chicago Board of Trade, is intended to complement CME’s interest rate futures and options business and its cleared OTC interest rate swap solution.
  • Newedge announced that it has received approval for membership to clear OTC interest rate swaps at the CME. It is the first FCM and non-traditional OTC IRS swap dealer to offer central counterparty clearing of OTC interest rate derivatives.

Forex

  • CME Group will launch its U.S. Dollar Denominated Ibovespa Futures on Oct. 22. The new cross-listing arrangement, created in partnership with the Brazilian Stocks, Mercantile & Futures Exchange, is designed to address barriers to market participation by providing customers with increased ease of access and more risk management tools.
  • Intercontinental Exchange Inc. (ICE) reached an agreement to process over-the-counter (OTC) foreign exchange contracts with ICE Link, its middleware service. The service is designed to provide affirmation, regulatory reporting and clearing connectivity for OTC FX market participants.
  • CME Group is expected to offer 30 forex futures products, including currency pairs involving the USD, EUR and CNY when it launches its European bourse next year.
  • Berkeley Futures Limited has been approved as a broker clearing member of the Dubai Gold and Commodities Exchange, adding to the exchange’s international membership base.
  • Newedge announced the launch of a new Foreign Exchange Prime Brokerage platform designed to provide institutional clients with increased access to the global currency market. The new platform includes expanded connectivity and an updated infrastructure for trade processing.
  • FTSE and Curex Group announced that the FTSE Curex FX Index Series will expand to include seven new streaming benchmark currency pairs, enabling investors to trade offshore Renminbi against seven major currencies at an independently calculated benchmark rate.

 Technology

  • Price Holdings launched Atrium Trading, a discount electronic brokerage division that gives self-directed traders access to multi-asset trading in a single margin account. Traders at all levels of experience can chart and trade using smartphones and tablets, and also can directly access all major global exchanges through customizable trading platforms.
  • NYSE Technologies, Americas Trading Group and Bolsa Mexicana de Valores (BMV) launched a new trading infrastructure designed to complement the introduction of BMV’s new matching engine and midpoint hidden order book.
  • OptionsCity Software released Freeway 2.0 and Metro 4.0, the latest editions of two trading platforms. Among the improvements to Freeway 2.0 are improved speed, API enhancements, enhanced multi-server management and updated risk management. The latest version of Metro 4.0 includes additional support for energy products, improved visualization and an enhanced user interface.
  • SS&C Technologies Holdings Inc. launched GoTrade+ a middle-office service for complex investment portfolios. Go+Trade supports post-trade activities of complex traded transactions such as bilateral and cleared over-the-counter derivatives, listed derivatives and loans. The services are designed to fit into existing client infrastructures.
  • GETCO, a global market maker, announced that it has added six new strategies for institutional investors to its GETAlpha suite of algorithmic trading tools. The suite, available via OMS vendors or direct vendors, is designed to leverage the infrastructure of a full-time market maker to add micro-alpha to institutional trading strategies.
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