CME Group, the world's largest and most diverse exchange, today announced upcoming technology and interest rate product enhancements designed to create a more liquid, efficient and competitive marketplace for market participants worldwide.
All enhancements are scheduled to be implemented in first quarter 2008.
CME Group will launch an upgrade to the CME Globex electronic trading platform that will significantly reduce message response time, already among the fastest in the industry. During testing, under a replay of peak market conditions the upgraded CME Globex platform demonstrated over a 50 percent reduction in response time, from an average of 31 milliseconds down to approximately 16.5 milliseconds. In 2007 an average 8.5 million contracts a day traded electronically at CME Group. The exchange continues to move ahead with the migration of CBOT products to the CME Globex platform. On Sunday, January 13, for a trade date of January 14, all e-cbot listed commodity and equity index products will begin trading electronically on CME Globex. CBOT interest rate products will then migrate from e-cbot to CME Globex on Sunday, January 27, for a trade date of January 28.
CME Group intends to implement a number of enhancements in its interest rate products designed to deliver significant value to its customers. Beginning March 3, CME Group plans to reduce the minimum tick size for three of its most actively traded interest rate contracts, the 30-Year U.S. Treasury Bond futures contract and both the 5-Year U.S. Treasury Note futures and options on futures. Pending CFTC approval, CME will implement the following modification to the minimum tick size:
- 30-Year U.S. Treasury Bond futures from 1/32nd to 1/2 of 1/32nd (from $31.25 to $15.625)
- 5-Year U.S. Treasury Note futures from 1/2 of 1/32nd to 1/4 of 1/32nd (from $15.625 to $7.8125)
- 5-Year U.S. Treasury Note options from 1/64th to 1/2 of 1/64th from ($15.625 to $7.8125)
To better facilitate the execution of large transactions by futures and cash market participants and harmonize the trading rules between CME and CBOT interest rate products, CME Group also announced that it will begin allowing block trades for the first time ever for certain CBOT interest rate products. Block trading in this market is expected to begin February 4, and is subject to CFTC approval.
"Since completing our merger with CBOT last summer, our combined company has been focused on delivering tangible benefits, including new trading opportunities and increased cost and trading efficiencies, to our customers," said CME Executive Chairman Terry Duffy. "The enhancements we announced today are prime examples of the new value we are creating for market users across all fronts. Later this month electronically traded CBOT contracts will migrate to CME Globex, allowing customers to access all major asset classes from a single platform. Additionally, we will be consolidating our trading floors in the historic Chicago Board of Trade building, which will create new cross-product trading opportunities."
"At CME Group, we continue to place the highest priority on increasing trading and technology efficiencies for our customers," said CME Chief Executive Officer Craig Donohue. "Following months of consultation with our Treasury futures and options customers, we are pleased to announce reduced tick sizes that will decrease our customers' total transaction costs, as well as new block trading facilities that will further expand our customers' execution choices while reducing market impact costs for very large orders. These enhancements, along with the 50 percent reduction in average response times across all CME futures products and our migration of CBOT commodity, equity index and interest rate products to the CME Globex platform later this month, will ensure that CME Group continues to provide the most efficient and cost effective risk management tools for market participants around the world."
CME Group interest rate products span the entire U.S. dollar denominated yield curve and are among the world's most actively traded futures and options on futures contracts. They are an important risk management tool for managing short-, medium- and long-term interest rate risk with products based on Eurodollars, U.S. Treasuries, swaps and other dollar-related instruments as well as products for managing interest rate risk in Europe and Japan. In 2007 an average of 6.9 million interest rate contracts a day traded at CME Group, 3.1 million of which was in the Treasury complex.