The Merc has been eager to expand off its traditional strength in interest-rate futures trading.
Interest rate futures have taken nearly three rate cuts (0.68%) out of their 2007 Fed expectations.
Trading in interest rate futures fell almost 30% in December 2011 compared to the previous year.
Fewer than 700, 000 short-term interest-rate futures contracts traded on the Chicago Mercantile Exchange just six years ago.
The Actuarial Exchange of Chicago filed notice in January 2004 that it would begin trading interest rate futures.
It will hold a titanium grip on trading in interest rate futures and indexes, and a firm control over the markets for agricultural and other commodities.
New York Portfolio Clearing which is a startup clearing house co-owned by NYSE Euronext, has gained approval from the U.S. Commodity Futures Trading Commission to clear interest rate futures in the United States.
These involve selling short-term December 1999 interest-rate futures contracts and buying September 1999 and March 2000 ones, on the assumption that short-term rates will spike over the millennium because of extra demand for cash.
Also, under present law that blended rate on futures is popping up to 32.8% in 2013.
In effect, securities traders could get a tax cut, using the same tax rate that futures traders use now.
It has done nothing to dispel the idea that if Wall Street clamours loudly enough for a rate cut and futures markets price one in with any degree of certainty the Fed will oblige.
Fed funds futures even discounted a rate hike at next month's regular Open Market Committee meeting.
The European Central Bank (ECB) certainly remains on tenterhooks with about 30% of futures dealers pricing in a refi-rate (refinancing rate) cut on Thursday.
Judging by the price of Fed fund futures, investors expect the federal funds rate to be as low as 2.25% by the end of the year.
All the same, the usually predictive Fed-funds futures market is pointing to another interest-rate cut of half a percentage point at the Fed meeting at the end of this month.
Alan Bush, senior financial futures analyst at Archer Financial Services, said the rate cut was a slight surprise.
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The precious metals and many other raw commodity futures markets did get a boost from the China rate-cut news Thursday.
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It is a founding member of ERIS, which has developed a futures contract that mimics a variable Libor-based interest rate swap.
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The futures market was pricing in some chance of an interest-rate hike before the year is out.
Eurodollar futures and options, where investors hedged or speculated on the interest rate paid on a 90-day deposit of a dollar overseas, were half of the Merc's business, with 1.5 million contracts traded per day.
And yet fixed-rate mortgages are still rather common, and two attempts to build a market in CPI futures have fizzled.
The Justice Department started investigating potential rate manipulation about three years ago, in conjunction with the U.S. Commodity Futures Trading Commission and the U.K. Financial Services Authority.
Trading in federal funds futures indicated an 84.0% chance that the central bank would cut its overnight rate target to 1.25% on Oct. 29, following its half-point reduction on Wednesday.
We can help teenagers, who have the highest unemployment rate, find summer jobs, so they can know the pride of work and have confidence in their futures.
Duffy and Donohue argued that the two exchanges rarely competed directly, and that their chief competition wasn't other futures markets but the vastly larger markets in over-the-counter derivatives like interest-rate swaps.
Yet, even after the central banks' announcement, dealers cited by TradeTheNews.com said that some interest rate spreads were still high, with the TED spread (which is price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars) still above 30 basis points.
U.S. federal funds futures had 45% odds Friday that the Fed would cut the 5.25% fed funds rate to 5% by the next policy meeting on Sept. 18.
But last month, when the French futures exchange, Matif, opened electronic markets alongside its pits, trading in short-term interest-rate contracts quickly migrated to the computers.
According to a study by the Federal Reserve Bank of Chicago, that city's futures industry employs 151, 000 people, directly or indirectly, and is creating those jobs at a rate 50% faster than the Chicagoan average.
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