CME Prepares For July 6 Launch Of Side-By-Side Trading Of Eurodollars

The Chicago Mercantile Exchange (CME) is on schedule for a July 6 commencement of side-by-side electronic and open outcry trading of its flagship Eurodollar futures contracts. "The introduction of side-by-side Eurodollar trading provides our members and their customers with an important choice as they decide how to best access the world's most heavily utilized short-term interest rate hedging tool," said CME Chairman Scott Gordon. "This important step was made possible by a wide array of upgrades to the speed, capacity and functionality of our GLOBEX2 electronic trading system as well as modifications to our Eurodollar pit complex to facilitate smooth and seamless operations between the two trading platforms." All 40 quarterly and four serial month expirations of the Eurodollar futures contract will be available electronically through the GLOBEX2 system during regular trading hours, as will numerous Eurodollar spreads including packs, bundles, calendar spreads and butterflies. Among the enhancements that will facilitate side-by-side trading of Eurodollars are: GLOBEX2 upgrades that will significantly increase its speed, capacity and accessibility as well as its ability to execute the complex strategies involved in trading Eurodollars; installation of dozens of GLOBEX2 workstations on the CME trading floor; and, the introduction of the GALAX-C (GLOBEX Advanced Link Accessing Exchange Contracts) hand-held trading device into the Eurodollar pit. Numerous GLOBEX2 workstation installations have recently been completed to support the launch of side-by-side Eurodollar trading and other recent product innovations at the CME. By July 6, the number of GLOBEX2 terminals around the world will increase to over 960, making the system by far the largest electronic trading network of any North American futures exchange. Within the Eurodollar pit complex itself, the exchange has installed nearly 60 new GLOBEX2 workstations, which have been designated specifically for independent Eurodollar floor traders and floor brokers. Additionally, 35 member firm desks in the interest rate complex have been equipped with GLOBEX2 workstations. Price display boards on the CME's trading floor have also been modified to reflect prices in both the pit and electronic markets. Important enhancements to increase the accessibility and flexibility of the GLOBEX2 system are also nearing completion. Chief among these is the scheduled rollout by July 31 of the CME's new Financial Information Exchange (FIX) application programming interface (API). The CME's FIX API will allow the GLOBEX2 trading system to be accessed by front-end systems designed by independent software vendors as well as the trading systems of individual member firms. In addition the API will give firms access to the exchange's open outcry platform. The GALAX-C hand-held trading device will make its debut in the Eurodollar pit in conjunctionwith the start of side-by-side Eurodollar trading. The palm-sized unit will give independent traders located on the floor direct access to the first eight quarterly expirations of the Eurodollar contract. In turn, they will have the ability to execute electronic Eurodollar trades without leaving the pit, providing them with the opportunity to immediately take advantage of arbitrage opportunities that may develop between the two markets and add to the liquidity of the new electronic market. The hand-held trading device has been in operation since early April in the CME's British pound futures pit where it is used to trade in the cash currency markets through the CME's GFX Corporation subsidiary. Traders have executed thousands of transactions in the cash markets using the system in the British pound pit. Eurodollar contracts traded via open outcry will continue to be represented by the symbol "ED," though electronically traded contracts will now be represented by the symbol "GE." Positions in both markets will be completely fungible. The launch of side-by-side Eurodollar trading will result in around-the- clock access to the CME's flagship product, with trading sessions commencing Monday through Thursday at 4:30 p.m. and concluding at 4 p.m. Central time the following day. (Sunday and holiday sessions will run from 5:30 p.m. to 4 p.m. Central time the following day.) For purposes of daily settlement, the CME's Clearing House will continue to utilize the closing prices from the conclusion of the open outcry session, including trades that are executed on GLOBEX2 between 2 p.m. and 4 p.m. Eurodollar futures will continue to trade on the trading floor via open outcry from 7:20 a.m. to 2 p.m. Additionally, Eurodollar options will continue to trade exclusively via open outcry during regular trading hours and on the GLOBEX2 system from 2:10 p.m. to 7:05 a.m. the following business day.