OneChicago, an equity finance exchange, is launching a listing of weekly futures products with next-day settlement to each day of the week.
The first weekly futures products will launch on Friday June 20 on four exchange traded funds (ETFs) based on the S&P sector funds and on Apple(NYSE:AAPL) stock futures. The ETF weekly futures will be based on the Financial Select Sector SPDR Fund (XLF), the Energy Select Sector SPDR Fund (XLE), the Technology Financial Select Sector SPDR Fund (XLK) and the Industrial Financial Select Sector SPDR Fund. They will settle each day of the week based on a one-week time frame.
Thomas G. McCabe, Chief Operating Officer of OneChicago says there was demand for the product from the securities stock lending industry. “We have gotten requests from customers who asked for a weekly settled futures,” he says.
Recent Internal Revenue Service (IRS) rules have created a need for more short-term products according to McCabe, who added that the recent success of weekly options products on numerous options exchanges has also created demand for weekly futures.
The weekly futures product will enable market participants to establish or reestablish stock positions within five business days after substituting a stock position for a legally binding contract.
OneChicago expects to roll out additional weekly options products shortly after the initial launch.
OneChicago launched as one of two U.S. based security futures product exchanges in 2002 after the Commodity Futures Modernization Act of 2000 lifted restriction on listing single stock futures that were part of the 1982 Shad-Johnson Accord. OneChicago was a joint venture of the Chicago Mercantile Exchange, Chicago Board Options Exchange and Chicago Board of Trade (CME and CBOE initially owned 45% each with CBOT owning 10%). In 2006 Interactive Brokers bought a 40% stake in OneChicago becoming the majorirty owner.
Single stock futures were launched with great anticipation and fanfare in 2002 but have not grown as strongly in the United States as they have in other jurisdictions, which has been attributed to regulations that called for the product to be dually regulated by the Commodity Futures Trading Commission and Securities and Exchange Commission.