In a special opening procedure concluded at 1 p.m. Wednesday, 5,759,346 Gold TRAKRS contracts representing approximately $144 million were traded. This was the most successful launch yet of TRAKRS, exceeding the previous record of 5 million contracts traded in a special opening procedure for Commodity TRAKRS on July 1, 2003.
Gold TRAKRS are the latest of the innovative new products offered by the CME in collaboration with Merrill Lynch. Gold TRAKRS are non-traditional futures contracts designed to provide investors with an efficient way to gain exposure to the Gold TRAKRS Index. The Gold TRAKRS Index is designed to track the spot price of gold and a total return component that will reflect an accrual at a rate equal to the one-month lease rate for gold. The lease rate is intended to represent the compensation an owner of gold would receive in return for lending gold for a period of one month. A more complete description of the Gold TRAKRS and the Gold TRAKRS Index is presented in the Gold TRAKRS Disclosure Document Supplement available at www.trakrs.com.
Gold TRAKRS will begin their regular trading schedule today, and will trade on business days from 8:30 a.m. to 3:00 p.m. (Central time) on CME's GLOBEX® electronic trading platform.
TRAKRS, or Total Return Asset ContractsSM are designed to enable investors to track an index of stocks, bonds, currencies, commodities or other financial instruments. Previous TRAKRS offerings include Long-Short Technology TRAKRS, Select 50 TRAKRS, LMC TRAKRS, Commodity TRAKRS and Euro Currency TRAKRS. TRAKRS are the first broad-based index products traded on a U.S. futures exchange that can be sold by securities brokers. Furthermore, when purchased by non-institutional investors, they are the first futures contracts that can be held in securities accounts. Each TRAKRS contract, for which CME receives significantly lower than usual clearing fees, has a notional value of $25 at launch.
TRAKRS differ from traditional futures contracts in significant ways. TRAKRS are not leveraged for most long non-institutional investors, who are required to post 100 percent of the TRAKRS market value at the time of purchase. As a result, non-institutional investors establishing long TRAKRS positions will not be subject to margin calls or any requirement to make any additional margin payments throughout the life of their TRAKRS positions. Non-institutional investors establishing short TRAKRS positions post 50 percent of the price. Short positions held by non-institutional investors are subject to certain maintenance payments if the settlement price increases substantially. Alternatively, if the settlement price decreases significantly, the non-institutional investors will receive a maintenance payment. Securities brokers, subject to notice registering with the National Futures Association, are able to solicit trades in TRAKRS from non-institutional investors.
TRAKRS contracts may be held until their expiration (generally three years from their offering date), when they will be cash-settled, or they may be liquidated on GLOBEX during regular trading hours.
Qualified Institutional Buyers (QIBs) - both buyers and sellers - must post performance bonds to be determined by CME's Clearing House Division consistent with its normal margining requirements for futures contracts. QIBs generally include institutions or entities that in the aggregate own and invest on a discretionary basis at least $100 million in securities. Members of CME are treated as QIBs for purposes of trading TRAKRS. TRAKRS positions of QIBs are carried in traditional futures accounts and can only be handled by securities brokers who are also registered with the Commodity Futures Trading Commission to handle futures.
Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 36 countries and total client assets of approximately $1.4 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets, with assets under management of $473 billion. For more information on Merrill Lynch, please visit www.ml.com.
Chicago Mercantile Exchange Inc. (www.cme.com) is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX® electronic trading platform. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. As of Nov. 30, 2003, CME's Clearing House managed $34.1 billion in collateral deposits. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index.
GLOBEX is a registered trademark of Chicago Mercantile Exchange Inc. TRAKRS, Total Return Asset Contracts, Gold TRAKRS and Gold TRKARS Index are service marks of Merrill Lynch. TRAKRS are U.S.Patent Pending. Further information about CME and its products is available on the CME Web site at www.cme.com.
