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The newly selected firms are among the most active participants in CME’s options on Eurodollar futures markets and join DRW Trading, who CME announced in March as a lead market maker in the program.
CME’s patent-pending Eurodollar options on GLOBEX technology will facilitate trading of complex combination and spread trades typically used with short-term interest rate options products in a fully transparent and competitive execution environment.
“The firms participating in our Eurodollar options on GLOBEX market maker program have years of experience in these highly sophisticated markets and already provide significant liquidity in our Eurodollar options complex,” said CME Chairman Terry Duffy. “Their commitment to providing liquidity in this important new trading venue means CME will offer the Eurodollar options marketplace unparalleled flexibility, transparency and execution.”
“CME’s Eurodollar options volume year-to-date has averaged over 500,000 contracts a day, up over 70 percent since 2001. Our new Eurodollar options on GLOBEX platform will offer real-time options pricing, “two-click” execution and straight-through processing of trades and will bring a new level of sophistication and ease of use to global interest rate options market participants,” said CME CEO Craig Donohue. “While we’re launching this new proprietary technology in our Eurodollar options market, we are establishing a plan to expand its benefits to other CME options markets in the near future.”
Under the program, lead market makers are required to provide continuous, two-sided indicative quotes for various outright contracts and selected spread combinations. Lead market makers are also obligated to respond to requests for quotes (eRFQs) within specified bid-ask, quantity and response time parameters. The three additional lead market makers selected are:
- Chicago Trading Company (CTC)
- Knight Financial Products
- SKTY Trading.
CME has also selected the following seven firms to serve as responding market makers, which are obligated to respond to Requests for Quotes from (eRFQs) within specified parameters:
- Equitec
- GETCO
- KC-CO II
- Ronin Capital
- SMW Trading
- Sullivan Crouth
- W.H. Trading.
The launch of Eurodollar options on GLOBEX will also result in greater liquidity and price transparency during non-floor trading hours, especially during European trading hours, in which CME’s Eurodollar futures contract has already seen significant growth in recent months.
Since January when CME first announced its plans for its new Eurodollar options on GLOBEX functionality, there has been a dramatic increase in Eurodollar futures and options on futures trading both overall and on GLOBEX in particular. Average daily volume in Eurodollar futures on GLOBEX more than tripled from January to April, increasing from approximately 104,000 contracts per day to 396,000 contracts per day.
Chicago Mercantile Exchange Inc. (www.cme.com) is the largest futures exchange in theUnited 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. The exchange moved about $1.5 billion per day in settlement payments in the first quarter of 2004 and managed $38.1 billion in collateral deposits at March 31, 2004. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index.
