As a result, CME set a single-day trading volume record of 7.7 million contracts on July 1. Excluding all TRAKRS contracts, volume would have been 2.7 million contracts. The exchange's previous one-day volume record occurred on Oct. 31, 2002with more than 5.8 million contracts traded, including 2.6 million Select 50 TRAKRS. Each TRAKRS contract, for which CME receives significantly lower clearing fees of less than 1 cent per contract on average, had a notional value of $25 at launch.
Also on July 1, CME's open interest reached a record 26.4 million positions. The previous record was 25.3 million open positions, set on June 12, 2003. Open interest represents the number of futures and options on futures contracts outstanding at the close of trading each day.
TRAKRS are the first broad-based index products traded on a U.S.futures exchange that can be sold by securities brokers. The new Commodity TRAKRS are designed to provide investors with an effective way to gain exposure to the Dow Jones-AIG Commodity Index Total ReturnSM, a commodity index that currently reflects the total return on 20 exchange-traded futures contracts on physical commodities, including energy, metal and agricultural products. Commodity 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.
The first TRAKRS contracts were launched in July 2002. CME also trades Long-Short Technology TRAKRS, Select 50 TRAKRS and LMC TRAKRS. TRAKRS, which stands for Total Return Asset ContractsSM, are designed to enable investors to track an index of stocks, bonds, currencies, commodities or other financial instruments. TRAKRS are futures contracts based on an index that is calculated on a total return basis.
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, these investors will not be subject to margin calls or any requirement to make any additional payments throughout the life of their TRAKRS positions. Non-institutional investors establishing short TRAKRS positions post 50 percent of the price. Short positions must make certain maintenance payments if the settlement price increases substantially. Securities brokers, subject to notice registering with the National Futures Association, are able to solicit trades in TRAKRS from non-institutional investors. A TRAKRS position is held in the securities account of a non-institutional investor.
Buyers and sellers of TRAKRS contracts may hold the contracts until their expiration three years in the future, when they will be cash-settled, or they may liquidate their positions during regular trading hours.
Qualified Institutional Buyers (QIB) - both buyers and sellers - post a performance bond 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.
Disclosure documents related to TRAKRS are available at www.trakrs.com.
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 $1.1 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. 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 Statesfor the trading of futures and options on futures. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX around-the-clock electronic trading platform. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.5 billion per day in settlement payments in the first quarter of 2003 and managed $28.5 billion in collateral deposits at March 31, 2003. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME).
