The Chicago Board of Trade (CBOT®) today announced plans to launch a new futures contract based on the Dow Jones-AIG Commodity Index (DJ-AIGCISM) on October 2, 2006. The electronically traded Dow Jones-AIG Commodity Index Excess Return futures contract (DJ-AIG ER) reflects customer demand for an exchange-traded instrument that provides diversified, global commodities exposure.
This new contract, launched under a license agreement among the CBOT, Dow JonesSM and AIG Financial Products Corp. (AIGFP), replaces the existing CBOT DJ-AIGCI contract, which will be de-listed following its December 2006 expiration. The DJ-AIG ER will settle to the value of the DJ-AIGCI, rather than to the sum of its individual components, reflecting the deep liquidity of the global markets that comprise the index.
Robert D. Ray, Senior Vice President of Business Development at the CBOT said, “Our development of the DJ-AIG ER contract is the direct result of conversations with CBOT customers, who specifically requested a user-friendly futures contract based on the diverse global commodities markets. We believe the new contract offers a standardized alternative to over-the-counter transactions, making it an ideal risk management tool for entities that have trading restrictions in the OTC markets.”
According to Daniel Raab, Managing Director of AIG Financial Products Corp., “The redesigned contract provides an efficient mechanism for investing in and trading the DJ-AIGCI. Coupled with the first-rate operational capabilities at the CBOT, it should expand the use of DJ-AIGCI futures.”
The new DJ-AIG ER futures contract will trade on e-cbot from 8:15 a.m. – 1:30 p.m. CT, Monday through Friday. The CBOT is also creating a market maker program for the new DJ-AIG ER futures contract to ensure a two-sided market will be available to market participants. The CBOT is currently in negotiations with potential liquidity providers – AIGFP will serve as one of the market makers.
Commodities in the DJ-AIGCI include: Aluminum, Copper, Coffee, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Silver, Soybeans, Soybean Oil, Sugar, Unleaded Gasoline (RBOB), Wheat and Zinc.
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