The initiatives were developed by CME's Electronic Transition Committee following a series of focus group meetings and a comprehensive survey of its members to assess their educational needs, concerns and interest in transitioning to screen-based trading. Currently, about one-third of CME's approximately 3,000 actively trading members trade exclusively electronically on CME's GLOBEX® electronic trading platform, another one-third trade only on the exchange's two open outcry trading floors, and the remainder use both platforms.
"CME remains committed to offering its world-renowned risk management products on two state-of-the-art trading platforms - open outcry and electronic - allowing our customers to choose the venue that best meets their needs," said CME Chairman Terry Duffy. "Likewise, we want to ensure all of our members are equipped to create and capitalize on electronic trading opportunities, should they wish to participate. We understand that the two platforms require different trading skills that must be developed through training and practice. Our goal is to proactively help our floor-trading members become as successful trading electronically as they have been in the pits, by helping them gain the knowledge and skills they need to conduct some or all of their business on GLOBEX."
"Investors around the world rely on CME to provide some of the most liquid risk management markets in the world," said CME Chairman Emeritus and Senior Policy Advisor Leo Melamed. "Electronic trading at CME currently represents about 42 percent of our total volume. As that trend continues to grow, we want to protect and maintain our liquidity, which is truly the 'holy grail' of this business, by developing the next generation of futures traders. To that end, we want to ensure that our members - our liquidity providers and the true competitive asset of our exchange - are able to develop the skills and knowledge necessary to succeed trading online, should they choose to do so."
"Our exchange and our members are known for their entrepreneurial spirit," said CME Vice Chairman Jim Oliff. "Though we compete for trades on a daily basis, there is also a strong sense of community on our trading floors. Through our electronic transition initiatives, we want to leverage these two valuable characteristics and provide our members with new opportunities, as well as customized training and educational programs that will help them thrive in an electronic trading environment. Specifically, we want to introduce them to the whole array of products, services and potential business opportunities that we believe will be available in an increasingly electronic trading environment. This is a mission I take very seriously, as chairman of the Electronic Transition Committee and as a former floor trader who now trades exclusively on GLOBEX."
Electronic Trading Resource Center
Later this year, CME plans to open a fully equipped Electronic Trading Resource Center (ETRC) near its Lower Trading Floor to provide floor traders with an opportunity to learn the skills necessary to work in an electronic trading arena and to increase their comfort in that environment.
The ETRC will replicate an electronic trading room, including a large number of workstations offering front-end software from multiple Independent Software Vendors (ISVs), real-time news feeds and real-time trading simulators. The simulators allow traders to practice "trading" electronically and assess their profits and losses without incurring the financial risk of actual trading.
Member Priority Program
The GOAL (GLOBEX Open Access for Learning) Program for Members is designed to provide current members with cost-effective training and experience in electronic trading in a real trading environment that minimizes volatility and risk for members. Through this member program, CME will offer training, trading floor access and GLOBEX access to members after regular trading hours. Members can enroll in mock trading classes and training on using GLOBEX, electronic trading strategies, technical analysis and related topics.
Members can participate in the program at a cost of $75 per month plus the cost of Internet access. They also will receive significant fee reductions for GLOBEX access while participating in this program.
Electronic Permit Program
In addition, CME is introducing the GOAL Program for Permit Holders, which is designed to help develop the next generation of electronic liquidity providers. This program will allow new electronic traders to gain the kinds of hands-on insight and knowledge about trading that currently develops from experience on the floor.
"On our trading floors, new members and liquidity providers naturally develop as the clerks, runners and member firm personnel learn from our members and gain experience in the open outcry markets," Oliff said. "With the GOAL Program for Permit Holders, we will be able to provide a similar level of mentoring and experience in an electronic environment."
Permit-holding GOAL participants also will be offered GLOBEX training and mock trading classes, as well as after-hours floor access to trade electronically. To register for this program, individuals must have the sponsorship of a Futures Commission Merchant (FCM) and a clearing firm guarantee. As part of the application process, they must successfully complete a screening program conducted by CME's Shareholder Relations and Membership Services Department. Initially, as many as 300 people will be able to participate in this GOAL program, at a cost of $150 per month. An additional fee of $75 per month is required for Internet access, if desired.
Other Projects: Floor-Based Technology Support
Also this year, CME intends to continue upgrading its technological support of floor-based trading. Projects planned or under way include wiring all the booths on the trading floors for Internet access, which currently is offered only at some booths through member firms. In addition, CME plans to upgrade its electronic display boards, improve its news/information services and offer more of its upgraded GALAX-Cä hand-held devices, which allow electronic trading on GLOBEX while users are stationed in the trading pits.
CME's new electronic transition programs round out the series of initiatives introduced by the ETC in the last year, including GLOBEX training courses; a "Meet the Expert" speaker series, featuring presentations and advice from knowledgeable online traders; and other Web-based instruction and training tools. Additionally, the exchange is coordinating with a number of local universities to explore certificate programs and other educational opportunities for its members.
CME members and others who are interested in the exchange's electronic transition programs can find more information by visiting the CME Web site at www.cme.com/etc.
About GLOBEX and CME
As the largest futures exchange in the United States for the trading of futures and options on futures, Chicago Mercantile Exchange Inc. (www.cme.com) brings together buyers and sellers on its trading floors and GLOBEX around-the-clock electronic trading platform. The GLOBEX concept, approved by CME members in 1987, was the first move by any futures market in the world to create a global electronic trading platform. GLOBEX launched in June 1992. Eurodollar futures and options were listed on GLOBEX in August 1992, and CME's benchmark S&P 500® futures and options on futures became available electronically in September 1993. However, GLOBEX volume began to grow exponentially as CME expanded its electronic trading hours and introduced products solely for GLOBEX trading. The exchange first offered electronic trading during open outcry trading hours in 1997, when it launched E-miniä S&P 500 futures. This contract, which trades only on GLOBEX and is one-fifth the size of the standard S&P 500 contract, quickly became the fastest-growing product in CME's history. The E-mini NASDAQ-100® futures contract, launched in 1999, became the second-fastest. Today, GLOBEX is available virtually around the clock, five days a week, to customers all over the world. In the first six months of 2003, GLOBEX volume totaled more than 133 million contracts and represented 81 percent of transactions on CME.
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 half of 2003 and managed $29.1 billion in collateral deposits at June 30, 2003. 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. E-mini is a trademark of CME. S&P, S&P 500, NASDAQ-100, Russell 1000 and other trade names, service marks, trademarks and registered trademarks that are not proprietary to Chicago Mercantile Exchange Inc. are the property of their respective owners, and are used herein under license. Further information about CME and its products is available on the CME Web site at www.cme.com. Additional information on the Electronic Transition Committee is available online at www.cme.com/etc.
