The proposed CBOT® Mortgage futures and options contracts will track prices of conventional 30-year mortgage-backed securities issued by Fannie Mae and Freddie Mac. The new contracts are designed to focus on mortgage coupon levels at which new issuance is heaviest and trading activity is busiest. The new contracts will help to increase liquidity in the mortgage securities market by giving mortgage originators, servicers, dealers, and investors new and more effective risk-management tools.
The new contracts were certified by the CBOT® on Thursday, November 30, under the Commodity Futures Trading Commission’s recently adopted exchange certification procedures.
CBOT® Chairman David P. Brennan said, "Our members solidly support Mortgage futures. The U.S. mortgage-backed securities market is a large and rapidly growing market, and it is one of the biggest in the world without a futures market counterpart. These new contracts will open a whole new field of business for our members and customers, and they will provide a natural complement to our flagship Treasury and Agency contracts."
CBOT® Interim President and CEO Dennis A. Dutterer said, "The trading potential of CBOT® Mortgage futures and options contracts is strong. Combined with the unbeatable liquidity and efficiency of the CBOT® marketplace, these contracts will provide our customers superior and more effective hedging tools for their risk-management needs."
The CBOT® expects to launch Mortgage futures and options in the first quarter of 2001 on its open outcry trading floor and on a/c/e, its new electronic trading platform.
