"The SPCI provides investors with a benchmark for assessing returns on a commodity investment, as well as with an investment tool by which they can obtain exposure to a diversified commodity basket," said Robert Shakotko, Standard & Poor's Managing Director of Index Services. "Our commodity index is produced to the same high standards of and carries on the tradition of our widely followed S&P 500 Index."
The SPCI tracks 17 commodities in six sectors including grains, meat and livestock, metals, softs (coffee, sugar, cocoa), fibers, and energy. The prices used to calculate the index are the real-time prices of the relevant futures contracts traded on the commodities futures markets in New York and Chicago. A key feature of the Index is that it is geometrically calculated. Geometric indices protect against excessive risk that may be associated with large weightings of a single commodity that may result from a short-term price spike. Other commodity indices, such as the Goldman Sachs Commodity Index or the Dow Jones-AIG Commodity Index, use an arithmetic methodology.
"The strategic futures trading opportunities created by the geometric rebalancing of the SPCI combined with the impeccable reputation of Standard & Poor's will encourage investors to take advantage of the benefits that commodities as an asset class bring to an investment portfolio," said Mark D. Fichtel, President and CEO of NYBOT. "We intend to build upon our leadership role in providing alternative investment markets for those who seek true diversification, and this partnership with S&P, along with our recent introduction of the Commercial Markets Index (CMI) contracts, are prime examples of these efforts."
The NYBOT SPCI futures contract, which will begin trading in the fall of 2001, will list six active contract months: January (F), February (G), April (J), June (M), August (Q), and November (X). Expiration is the second Friday of the SPCI listed futures contract month, and the SPCI contract is cash settled (no delivery). Options on the futures contract will also be offered.
End-of-day index values and index history are available through both the Standard & Poor's Index Services website at www.spglobal.com/indexmaincommodity.html and NYBOT's Website at www.nybot.com. Starting September 17, SPCI will be calculated every 15 seconds, and will be available through traditional real-time quote vendors via the NYBOT; the ticker symbol will be 'I'.
Lee Kranefuss, CEO of Barclays Global Investors' Individual Investor Business, one of Standard & Poor's key partners in the development of exchange traded funds, stated the following about the new index: "More and more investors are seeking diversification through alternative investment strategies. Commodity-linked investments are an important part of these strategies, and BGI is exploring the early development of cost effective investment products based on the S&P Commodity Index, such as an iShares exchange traded fund."
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), provides independent financial information, analytical services, and credit ratings to the world's financial markets. Among the company's many products are the S&P Global 1200, the first real-time, global equity index, the S&P 500, the premier U.S. portfolio index, and credit ratings on more than 220,000 securities and funds worldwide. With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the world's financial architecture. For more information, visit the Standard & Poor's Website at www.standardandpoors.com.
The New York Board of Trade (NYBOT) is the parent company of the Coffee, Sugar and Cocoa Exchange, Inc. (CSCE) and the New York Cotton Exchange (NYCE). Through its two exchanges and their subsidiaries and divisions, including the New York Futures Exchange (NYFE), FINEX, and Citrus Associates, NYBOT offers a variety of agricultural, currency and index products.
