CHICAGO, Sept. 14 /PRNewswire-FirstCall/ — Chicago Mercantile Exchange Inc. (CME) announced today it will be launching CME X-Funds(TM), cash settled “baskets” of up to four futures contracts in an index that settle every two weeks, beginning Monday, October 4, 2004.
CME X-Funds are similar to an exchange-traded mutual fund made up of futures contracts except that the components of the fund change every two weeks. Each CME X-Fund contract will represent up to four futures contracts, selected by trading advisors called “fund designers.” Designers will be chosen by CME and the Chicago Board of Trade (CBOT).
“CME X-Fund Index designers will choose components that they believe have the highest potential for strong returns in each two-week cycle,” said Rick Redding, CME Managing Director, Products & Services. “Although the components may be based on economic correlation, fund designers may also include non- correlative components that allow flexibility to market participants in a short-term trading environment.”
The positions can be both long and short, concentrated in one sector or spread across various products, and include most CME and CBOT products. Its value will be measured like an index — starting with a value of 100 at the beginning of the two-week cycle. At the end of the cycle, each CME X-Fund liquidates and the administrator picks another set of contracts for the next cycle. The value, however, carries over into the next cycle, rather than returning to 100.
CME X-Fund Indexes are targeted at a variety of users, including individuals, institutional investors, professional traders, proprietary trading firms, commodity trader advisors, hedge funds, and investment managers to capitalize on dynamic trading opportunities, to leverage return on margin, and to create arbitrage positions in component contracts.
CME X-Fund futures contracts will be listed for electronic trading only starting with the October 4 through October 15, 2004, trading cycle. Trading hours for the launch will occur Monday, October 4, 10:00 a.m. – 3:15 p.m. followed by Tuesday, October 5 through the last trading day from 7:20 a.m. – 3:15 p.m. There is no trading on Saturday or Sunday. Beginning Monday, October 18, 2004, the funds will trade every day from 7:20 a.m. – 3:15 p.m. All times listed times are Central Time.
Chicago Mercantile Exchange Inc. ( http://www.cme.com ) is the largest futures exchange in the United 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 $1.6 billion per day in settlement payments in the first half of 2004 and managed $39.1 billion in collateral deposits as of June 30, 2004. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME – News), which is part of the Russell 1000® Index.
Chicago Mercantile Exchange, CME, the globe logo and GLOBEX are registered trademarks of Chicago Mercantile Exchange Inc. Further information about CME and its products is available on the CME Web site at http://www.cme.com .