In a special opening procedure concluded at 3 p.m. Central time today, 2,661,340 Select 50 TRAKRS contracts representing $66.5 million were traded. The Select 50 TRAKRS Index is a total return index composed of 50 stocks that are equally weighted, as of each monthly rebalancing, representing the stocks of the 50 companies with the largest market capitalizations in the S&P 500 Index, subject to certain exceptions. .
Select 50 TRAKRS will begin their regular trading schedule tomorrow, Nov. 1, 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, which stands for Total Return Asset ContractsSM, are designed to enable customers to track an index of stocks, bonds, currencies or other financial instruments. TRAKRS are futures contracts based on an index that is calculated on a total return basis. Declared dividends and other distributions are included in the calculation of the index.
The first TRAKRS, Long-Short Technology TRAKRS, were launched on CME July 31, 2002. To date, more than two million contracts have changed hands. Those contracts are designed to track the Long-Short Technology TRAKRS Index, a total return index designed by Merrill Lynch and composed of long positions in individual technology stocks, short positions in technology sectors or sub-sectors, and a possible cash component.
TRAKRS differ from traditional futures contracts in significant ways. TRAKRS are not leveraged for most long non-institutional customers, who are required to post 100 percent of the TRAKRS market value at the time of purchase. As a result, these customers will not be subject to margin calls or any requirement to make any additional payments throughout the life of their TRAKRS positions. Non-institutional customers 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 customers and hold a TRAKRS position in the securities account of a non-institutional customer.
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 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. In general, QIBs are defined in securities law and include, but are not limited to, institutions or entities that in the aggregate own and invest on a discretionary basis at least $100 million in securities that are not affiliated with them. Members of CME will be treated as QIBs for purposes of trading TRAKRS.
Disclosure documents related to TRAKRS are available at www.trakrs.com.
Merrill Lynch (www.ml.com) is one of the world's leading financial management and advisory companies, with offices in 37 countries and total client assets of approximately $1.4 trillion. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets.
Chicago Mercantile Exchange Inc. (www.cme.com) is the largest futures exchange in the United States and the second largest exchange in the world for 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 contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moves about $1.7 billion per day in settlement payments and manages $27.7 billion in collateral deposits. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc.
