The CME Group (NASDAQ:CME) has announced that it is broadening its index futures offering with a new partnership. The American futures company which is operating derivatives contracts exchanges in Chicago, London and New York has licensed from FTSE Russell several futures contracts on indices.
The deal includes a number of benchmarks spread across the globe. The U.S. contracts are the Russell 1000, the Russell 1000 Growth and the Russell 1000 Value, while the European market is represented by the FTSE 100 and the FTSE Developed Europe indices.
Recent market turmoil in several emerging economies has increased trading interest in a number of hotspots, namely China, which will be covered by the FTSE China 50 index, and the FTSE Emerging Market benchmark.
In addition the licensing agreement is including the Russell 2000, however the CME Group Inc (NASDAQ:CME) is in no rush to deploy it to the market – the contract will be available no earlier than the third quarter of 2017.
Up until now investors who have been keen to trade the Russell 1000 index on an exchange have had to rely on several ETFs (exchange traded funds).
Commenting on the announcement the CME Group’s Executive Chairman and President Terry Duffy said, “We will provide market participants with the capital efficiencies of trading multiple indexes on one platform and through a single clearing house.”
Adding to the comments, FTSE Russell’s Chief Executive Officer Mark Makepeace said, ”With more than $10 trillion of assets under management benchmarked to our indexes, this new partnership recognizes our growing position both in the domestic US market and globally.”
The partnership between the CME Group and FTSE Russell is adding a crucial set of markets to the U.S. investors willing to trade futures contracts on the widely volatile Chinese shares. The tracker under the name FTSE China 50 could be the biggest hit yet, while traders keen in other emerging markets can look into the FTSE Emerging Markets index.
The components of the Russell indices
As to the broader U.S. benchmark under the Russell brand, the Russell 1000 and the Russell 2000 indices will offer investors a more expanded measure of the market than the most popular S&P 500 and the Dow Jones industrial average.
The Russell 1000 is measuring the top 1000 shares traded in the U.S. while the Russell 2000 represents the smaller 2000 companies from the total 3000 which are included in the combined index Russell 3000. The latter includes about 98 percent of the investable U.S. equity market.
“Combining our strengths with those of FTSE Russell’s offers an unparalleled opportunity for the global markets,” said CME Group’s Chief Executive Officer Phupinder Gill. “Together, we are uniquely positioned to drive more efficient, inventive and robust solutions for our clients across global equity benchmarks.”
The first batch of new futures contracts is set to begin trading in the fourth quarter of 2015 and includes the Russell 1000, Russell 1000 Growth and Russell 1000 Value, FTSE 100, FTSE Emerging Markets, FTSE Developed Europe and FTSE China 50 indices.
(Photo: CME Group)