To increase electronic trading of CME Eurodollar options, the Chicago Mercantile Exchange will launch an incentive program for members and lessees who trade CME Eurodollar options on the CME Globex(R) electronic trading platform.
The program becomes effective Monday, May 1, 2006, and extends through the end of the year.
To be eligible for the program, 30% of the member’s CME Eurodollar Options volume must be traded electronically.
CME will aggregate individual member and member firm volume for all accounts within a single clearing firm. The program’s fee schedule will be:Equity/Clearing Members, reduced from $0.34 all-in per side to $0.24; Lessee Members, reduced from $0.45 all-in per side to $0.37; and 106H Corporate Members, reduced from $0.44 all-in per side to $0.39.
“CME continues to generate increasing volumes of electronically-traded CME Eurodollar options on futures, which is a key component of our growth strategy,” said CME Chairman, Terry Duffy. “Our new pricing structure is designed to strengthen the trend toward electronic trading by attracting new customers to our electronic CME Eurodollar options market as well as encourage increased participation in these markets from current customers.”
Of the approximately 1.1 million CME Eurodollar options contracts traded daily in March 2006 at the exchange, 58,000 contracts were traded electronically compared to 17,000 options contracts in March 2005. This is an increase from 51,000 CME Eurodollar options traded electronically in February 2006 and 47,000 in January.
Options on CME Eurodollar futures are a risk management tool that provides the opportunity for market participants to limit losses while maintaining the possibility of profiting from favorable changes in futures prices. Options liquidity allows market participants to take advantage of their views on the direction of US interest rates.