Difference between revisions of "U.S. Futures Exchange"

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{{Infobox_Company
{{Infobox_Company
| company_name = US Futures Exchange
| company_name = US Futures Exchange
| company_logo = [[Image:Usfe_logo.gif]] |
| company_logo = [[Image:Usfe_logo.gif]] |
| key_people = [[John W. Goldsberry]], interim CEO; [[John Spiegel]], deputy CEO; [[James M. Falvey]], general counsel;  [[Danijel Medic]], head of technology; [[Kevin Davis]], chairman
| key_people =  
| foundation = 2004, relaunched 2007
| foundation = 2004, relaunched 2007, closed 2008
| location =  141 W Jackson Blvd, Suite 1460 Chicago, IL 60604
| location =  141 W Jackson Blvd, Suite 1460 Chicago, IL 60604
| products = [[Foreign exchange]], [[equity indexes]] and renewable energy futures
| products = [[Foreign exchange]], [[equity indexes]] and renewable energy futures
| homepage= [http://www.usfe.com/ www.usfe.com]}}
| homepage= [http://www.usfe.com/ www.usfe.com]}}


The US Futures Exchange is an electronic derivatives platform, relaunched in April 2007 with a focus on [[retail]] and [[institutional]] products generally unavailable on other exchanges.
US Futures Exchange was a U.S. registered [[futures exchange]] that offered [[electronic trading]] of [[derivatives]]. It was formed in late 2006 when Man Group and its [[MF Global]] brokerage unit bought a majority stake in the US exchange formed by Eurex, which was then known as "[[Eurex US]]". The exchange was rebranded as US Futures Exchange in April 2007, focusing on trading binary contracts, which offer an all-or-nothing pay-out on a range of specific outcomes. The exchange discontinued operations on Dec. 31, 2008.<ref>{{cite web|url=http://www.ft.com/cms/s/2/efa72752-ef68-11db-a64e-000b5df10621.html|name=USFE seeks new friends on MySpace|org=Financial Times|date=April 28, 2008}}</ref>


The Chicago-based USFE was rebranded under new ownership following the October 2006 acquisition of a majority stake by [[Man Group]] and its [[MF Global]] brokerage unit from [[Eurex]], which retains a minority holding after its legacy organization, [[Eurex US]], failed to gain market traction following its launch in 2004.
[[Satish Nandapurkar]], CEO since its inception, left the post in January 2008, and was replaced on an interim basis by [[John Goldsberry]], with [[John Spiegel]] later named as CEO.
 
[[Satish Nandapurkar]], CEO since its inception, left the post in January 2008, and was replaced on an interim basis by [[John Goldsberry]].


== Business Overview ==
== Business Overview ==
<div style="float:left; margin-right:1em;">{{USFE Ad 1}}</div>
The revamped exchange has concentrated on developing the retail market with [[binary options]] and currency products, and moved into the [[institutional]] sector through a series of partnerships to list [[equity index]] [[derivatives]] while expanding into new areas such as [[renewable energy]] products.


The exchange also plans to use its low-cost structure – it has just 25 employees – to provide a “turnkey” platform for the listing of products developed in partnership with third parties.<ref>{{cite web|url=http://www.sfomag.com/homeinterviewdetail.asp?ID=1925105277&MonthNameID=October&YearID=2007|org=SFO Magazine|date=October 2007|name=USFE Takes the Field with a New Game Plan}}</ref>
U.S. Futures Exchange (USFE) concentrated on developing products to attract the [[retail]] market with mini-sized equity foreign equity [[index]] products and currency products. USFE tried to use a low-[[cost]] structure to provide a “turnkey” platform for the listing of products developed in partnership with third parties.<ref>{{cite web|url=http://www.sfomag.com/homeinterviewdetail.asp?ID=1925105277&MonthNameID=October&YearID=2007|org=SFO Magazine|date=October 2007|name=USFE Takes the Field with a New Game Plan}}</ref>


To gain traction, it works with [[MF Global]] and other brokers and enfranchises two to five [[market maker]]s for each product.
[[Clearing]] was provided by [[The Clearing Corporation]], the platform was operated by [[Deutsche Boerse]] Systems, and it was regulated by the [[National Futures Association]].<ref>{{cite web |url=http://www.cftc.gov/files/dea/deausfedesignationdocument.pdf|name=Application of U.S. Futures Exchange, L.L.C. for Designation as a Contract Market Pursuant to Sections 5 and 6(a) of the Commodity Exchange Act|org=U.S. Commodity Futures Trading Commission|date=April 28, 2008}}</ref>


[[Clearing]] is provided by [[The Clearing Corporation]]<ref>{{cite web |url=http://www.cftc.gov/files/dea/deausfedesignationdocument.pdf|name=Application of U.S. Futures Exchange, L.L.C. for Designation as a Contract Market Pursuant to Sections 5 and 6(a) of the Commodity Exchange Act|org=U.S. Commodity Futures Trading Commission|date=April 28, 2008}}</ref>, its platform is operated by [[Deutsche Börse]] Systems and regulation is by the [[National Futures Association]].
The USFE at one point had a page on MySpace, the social networking platform, though it was later pulled.<ref>{{cite web|url=http://www.ft.com/cms/s/2/efa72752-ef68-11db-a64e-000b5df10621.html|name=USFE seeks new friends on MySpace|org=Financial Times|date=April 28, 2008}}</ref>


The USFE also has a page on MySpace, the social networking platform.<ref>{{cite web|url=http://www.ft.com/cms/s/2/efa72752-ef68-11db-a64e-000b5df10621.html|name=USFE seeks new friends on MySpace|org=Financial Times|date=April 28, 2008}}</ref>
== Shareholders ==
The spin-off of [[MF Global]] made it the largest single [[shareholder]] in the USFE, with a 49.9 percent stake, with [[Man Group]]’s holding reduced to 17 percent. Both companies committed to a proportionate reduction in their holdings to bring in other partners, but the rogue-trading scandal and other issues that dogged MF Global complicated those plans.<ref>{{cite web|url=http://online.wsj.com/article/SB123007926246731807.html|name=End of Line For Futures Exchange|org=The Wall Street Journal|date=August 19, 2013}}</ref>


== History ==
[[Eurex]] had a 27 percent stake, with management and other investors holding 6.1 percent.<ref>{{cite web|url=http://www.sec.gov/Archives/edgar/data/1401106/000119312507126679/0001193125-07-126679-index.htm|name=MF Global F-1 filing|org=Securities and Exchange Commission|date=October 31, 2007}}</ref>
[[Eurex US]] was launched with much fanfare in February 2004 as the beachhead for its German-Swiss parent’s continued expansion in the US, challenging the dominance of the [[CBOT]] in [[US Treasury Futures]].
 
The operation was conceived as a full-service electronic exchange, part of its German-Swiss parent’s plan to create a global trading platform with access for the full trading days in Europe, Asia and North America. [[Eurex]] held 80 percent in the venture, with a group of 17 investment banks holding the balance.
 
[[Eurex US]] received approval from the [[CFTC]] in February 2004, despite fierce opposition from some US exchanges which had expressed concern about the regulatory oversight of a foreign-controlled entity.<ref>{{cite web|url=http://www.cftc.gov/opa/press04/opausferemarks.htm|org=CFTC|name=Speech by James Newsome, CFTC chairman|date=December 28, 2007}}</ref>.
 
However, the launch drew a competitive response from the [[CBOT]], which cut and waived fees in an effort to stem the shift in [[order flow]] to [[Eurex US]], which had waived its own [[fees]] in an bid to gain traction.
 
Volumes dwindled from more than 40,000 contracts in the first two days of trading, though rebounded with the launch of new incentive programs and plans to list its parent’s European products – approved by the [[CFTC]] in October 2004 - before falling again in the wake of the [[CBOT]]’s competitive response.
 
A year after its launch, [[Eurex US]] had captured around five percent of volumes in benchmark [[Treasury]] products from the [[CBOT]], and extended its opening hours in April in an effort to capture more business from Asia.
 
While US Treasury volumes remained light, [[Eurex]] said the creation of a common clearing link – allowing US traders access to benchmark euro-denominated products through the[[ Eurex US]] platform had boosted overall business.
 
The competition with the Chicago exchanges intensified in September 2005 with the launch of currency futures, taking Eurex US head-to-head with the [[CME]], which lowered its own trading fees ahead of the move. [[Eurex US]] subsequently filed an anti-trust complaint against the [[CME]] and the [[CBOT]], alleging repeated anticompetitive behavior and unlawful attempts to block the entrance of a new competitor to the market.
 
A strategic review of the business in late 2005 was followed by the departure of [[Rudolf Ferscha]] as head of [[Eurex]] in the wake of [[Reto Francioni]]’s appointment as chief executive of Deutsche Börse<ref>{{cite web |url=http://search.ft.com/ftArticle?sortBy=gadatearticle&queryText=Ferscha&page=2&y=0&aje=false&x=0&id=051229001458&ct=0 |org=Financial Times|name=Eurex Chief Quits Following Boardroom Split|date=November 19, 2007}}</ref>.
 
A further strategic review saw Deutsche Borse approach [[Man Group]] and its brokerage unit - then known as [[Man Financial]] - in late 2005 as potential investors. The UK group announced in July 2006 that it had agreed to pay $23.2 million for a 70 percent stake in the business, with Eurex retaining the remaining 30 percent. Man also agreed to invest a further $35 million in the business.<ref>{{cite web|url=http://search.ft.com/ftArticle?queryText=Man+Injects+Life+Into+Dying+B%C3%B6rse+Arm.&y=4&aje=true&x=9&id=060731000773&ct=0|name=Man Injects Life Into Dying Börse Arm|org=Financial Times|date=November 19, 2007}}</ref>
 
== Shareholders ==
The spin-off of [[MF Global]] has made it the largest single shareholder in the USFE, with a 49.9 percent stake, with [[Man Group]]’s holding reduced to 17 percent. Both companies have committed to a proportionate reduction in their holdings to bring in other partners. [[Eurex]] retains a 27 percent stake, with management and other investors holding 6.1 percent.<ref>{{cite web|url=http://www.sec.gov/Archives/edgar/data/1401106/000119312507126679/0001193125-07-126679-index.htm|name=MF Global F-1 filing|org=Securities and Exchange Commission|date=October 31, 2007}}</ref>


== Product Development ==
== Product Development ==
The new USFE launched its first product on Apr. 20, 2007, a [[binary future]] based on the outcome of the takeover battle for the [[Chicago Board of Trade]] between the [[Chicago Mercantile Exchange]] and the [[IntercontinentalExchange]]<ref>{{cite web|url=http://search.ft.com/ftArticle?sortBy=gadatearticle&queryText=USFE&y=0&aje=true&x=0&id=070323000858&ct=0 |org=Financial Times|name=USFE Takes a Bet on Chicago Bid Outcome|date=November 19, 2007}}</ref>. The company announced plans in October 2007 to develop the binary events complex with weekly options based on the performance of four asset classes: oil, gold, silver and three currency pairs - dollar/euro, dollar/yen and dollar/Australian dollar. A technical launch is planned for December 2007, with formal trading in the first quarter of 2008. The acquisition by [[MF Global]] in January 2007 of [[ChoiceOdds]], an independent UK-based financial binary trading firm, is expected to lead to Asian and European [[OTC]] contracts developed by the firm being listed on the USFE<ref>{{cite web|url=http://www.mfglobalinvestorrelations.com/phoenix.zhtml?c=194911&p=irol-newsArticle&ID=1092367&highlight=|name=Press release|org=MF Global|date=January 22, 2008}}</ref>.
The new USFE launched its first product on Apr. 20, 2007, a [[binary future]] based on the outcome of the takeover battle for the [[Chicago Board of Trade]] between the [[Chicago Mercantile Exchange]] and the [[Intercontinental Exchange]].<ref>{{cite web|url=http://search.ft.com/ftArticle?sortBy=gadatearticle&queryText=USFE&y=0&aje=true&x=0&id=070323000858&ct=0 |org=Financial Times|name=USFE Takes a Bet on Chicago Bid Outcome|date=November 19, 2007}}</ref>
 
The suite of equity index derivatives includes futures contracts based on 16 [[USFE Morningstar Style Indexes| Morningstar Style Indexes]] and on the USFE's [[ISE Sector Indexes| International Securities Exchange’s sector indexes]].
 
The first ISE products were launched on Sep. 14, 2007, under a multi-year partnership with the [[options]] exchange, which is now controlled by [[Deutsche Börse]]. They included [[futures]] with quarterly expiries based on the ISE’s water, homebuilders, natural gas and gold indexes. ISE lists options based on the indexes. [[Credit Suisse]] and [[Tradelink]] are among the firms providing [[liquidity]] for the products.
 
Contracts based on nine [[Morningstar equity indexes]] started on Sept. 28, 2007. [[Credit Suisse]] is among the liquidity providers.
 
Wind-power contracts, derived from the [[NORDIX Financial Wind Indexes]] created by [[Weather Bid]], were launched Aug. 24, 2007, offering seven contracts based on speed from five wind regions in Texas and two in New York state, with monthly expiries. The indexes are composed of deviations from 20-year historical wind-speed averages compared with daily figures. The suite of [[renewable energy futures]] will be expanded to include contracts based on hydro, solar, geothermal and biomass-derived power.


The USFE’s push into the [[retail]] market saw its first foreign exchange contracts listed on Sept. 21, 2007. The [[Spot Equivalent Futures]] trade on a 23-hour basis, with six initial currency pairs including the US dollar against the euro, yen, sterling, Swiss franc, Canadian dollar and the Australian dollar.
USFE's push into the [[retail]] market saw its first foreign exchange [[contract]]s listed on Sept. 21, 2007. The FX [[Spot Equivalent Futures]] traded on a 23-hour basis, with six initial currency pairs including the U.S. dollar against the [[euro]], [[yen]], [[sterling]], [[Swiss franc]], [[Canadian dollar]] and the [[Australian dollar]].


The first fixed-income products are slated for launch in the first quarter of 2008, with futures based on four indexes licensed from [[Lehman Brothers]]. Credit derivative products are being developed, with [[futures]] based on the government debt tranche of [[Dow Jones’ CDX index]], including credit default swaps on [[Fannie Mae]] and [[Freddie Mac]], the federal US housing finance agencies.
USFE announced on Nov. 12, 2007, that it would exclusively license the [[Bombay Stock Exchange]]’s (BSE) benchmark [[USFE SENSEX Index|SENSEX Index]]. US dollar-denominated futures trading began on Apr. 4, 2008. USFE’s SENSEX contract allows eligible US [[investor]]s to participate in India’s equity markets without requiring [[American Depository Receipt]] (ADR) authorization. The [[SENSEX Index]] is composed of 30 major Indian [[stock]]s and is regarded as the country’s premier stock market index.  


USFE announced on Nov. 12, 2007, that it would exclusively license the [[Bombay Stock Exchange]]’s (BSE) benchmark [[USFE SENSEX Index|SENSEX Index]]. US dollar-denominated futures trading began on Apr. 4, 2008. USFE’s SENSEX contract allows eligible US investors to participate in India’s equity markets without requiring [[American Depository Receipt]] (ADR) authorization. The SENSEX Index is composed of 30 major Indian stocks and is regarded as the country’s premier stock market index. The SENSEX’s value has risen more than 600 percent since its low in May 2003.<ref>{{cite web|url=http://www.usfe.com/pr/BSE%20USFE%20Media%20Release.pdf |org=USFE|date=November 12, 2007|name=Press Release}}</ref>
The exchange launched a dollar-denominated [[mini-Dax]] contract licensed from [[Deutsche Borse]] on Oct. 1, 2008, tracking the benchmark Dax 30 and using a [[maker-taker]] [[pricing model]].<ref>{{cite web|url=http://www.usfe.com/pr/USFE%20Maker-Taker%20Release.pdf|name=U.S. FUTURES EXCHANGE TO INTRODUCE MAKER-TAKER PRICING MODEL FOR MINI-SIZED U.S. DOLLAR-DENOMINATED DAX FUTURES CONTRACT|org=USFE|date=December 26, 2008}}</ref>


== References ==
== References ==
Line 71: Line 39:


== External Links ==
== External Links ==
*[http://www.myspace.com/usfe/ USFE MySpace page]
*[http://www.cftc.gov/files/dea/deausfedesignationdocument.pdf/ CFTC approval letter]
*[http://www.cftc.gov/files/dea/deausfedesignationdocument.pdf/ CFTC approval letter]
*[http://www.clearingcorp.com/ The Clearing Corporation]
*[http://www.clearingcorp.com/ The Clearing Corporation]
*[http://deutsche-boerse.com/dbag/dispatch/en/kir/gdb_navigation/home/ Deutsche Börse Group]
*[http://deutsche-boerse.com/dbag/dispatch/en/kir/gdb_navigation/home/ Deutsche Boerse Group]
*[http://www.ise.com/ International Securities Exchange]
*[http://www.ise.com/ International Securities Exchange]
*[http://www.mfglobal.com/home/default.aspx/ MF Global]
*[http://www.mfglobal.com/home/default.aspx/ MF Global]

Latest revision as of 19:45, 2 November 2018


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US Futures Exchange
Usfe logo.gif
Founded 2004, relaunched 2007, closed 2008
Headquarters 141 W Jackson Blvd, Suite 1460 Chicago, IL 60604
Products Foreign exchange, equity indexes and renewable energy futures
Website www.usfe.com

US Futures Exchange was a U.S. registered futures exchange that offered electronic trading of derivatives. It was formed in late 2006 when Man Group and its MF Global brokerage unit bought a majority stake in the US exchange formed by Eurex, which was then known as "Eurex US". The exchange was rebranded as US Futures Exchange in April 2007, focusing on trading binary contracts, which offer an all-or-nothing pay-out on a range of specific outcomes. The exchange discontinued operations on Dec. 31, 2008.[1]

Satish Nandapurkar, CEO since its inception, left the post in January 2008, and was replaced on an interim basis by John Goldsberry, with John Spiegel later named as CEO.

Business Overview[edit]

U.S. Futures Exchange (USFE) concentrated on developing products to attract the retail market with mini-sized equity foreign equity index products and currency products. USFE tried to use a low-cost structure to provide a “turnkey” platform for the listing of products developed in partnership with third parties.[2]

Clearing was provided by The Clearing Corporation, the platform was operated by Deutsche Boerse Systems, and it was regulated by the National Futures Association.[3]

The USFE at one point had a page on MySpace, the social networking platform, though it was later pulled.[4]

Shareholders[edit]

The spin-off of MF Global made it the largest single shareholder in the USFE, with a 49.9 percent stake, with Man Group’s holding reduced to 17 percent. Both companies committed to a proportionate reduction in their holdings to bring in other partners, but the rogue-trading scandal and other issues that dogged MF Global complicated those plans.[5]

Eurex had a 27 percent stake, with management and other investors holding 6.1 percent.[6]

Product Development[edit]

The new USFE launched its first product on Apr. 20, 2007, a binary future based on the outcome of the takeover battle for the Chicago Board of Trade between the Chicago Mercantile Exchange and the Intercontinental Exchange.[7]

USFE's push into the retail market saw its first foreign exchange contracts listed on Sept. 21, 2007. The FX Spot Equivalent Futures traded on a 23-hour basis, with six initial currency pairs including the U.S. dollar against the euro, yen, sterling, Swiss franc, Canadian dollar and the Australian dollar.

USFE announced on Nov. 12, 2007, that it would exclusively license the Bombay Stock Exchange’s (BSE) benchmark SENSEX Index. US dollar-denominated futures trading began on Apr. 4, 2008. USFE’s SENSEX contract allows eligible US investors to participate in India’s equity markets without requiring American Depository Receipt (ADR) authorization. The SENSEX Index is composed of 30 major Indian stocks and is regarded as the country’s premier stock market index.

The exchange launched a dollar-denominated mini-Dax contract licensed from Deutsche Borse on Oct. 1, 2008, tracking the benchmark Dax 30 and using a maker-taker pricing model.[8]

References[edit]

  1. ↑ USFE seeks new friends on MySpace. Financial Times.
  2. ↑ USFE Takes the Field with a New Game Plan. SFO Magazine.
  3. ↑ Application of U.S. Futures Exchange, L.L.C. for Designation as a Contract Market Pursuant to Sections 5 and 6(a) of the Commodity Exchange Act. U.S. Commodity Futures Trading Commission.
  4. ↑ USFE seeks new friends on MySpace. Financial Times.
  5. ↑ End of Line For Futures Exchange. The Wall Street Journal.
  6. ↑ MF Global F-1 filing. Securities and Exchange Commission.
  7. ↑ USFE Takes a Bet on Chicago Bid Outcome. Financial Times.
  8. ↑ U.S. FUTURES EXCHANGE TO INTRODUCE MAKER-TAKER PRICING MODEL FOR MINI-SIZED U.S. DOLLAR-DENOMINATED DAX FUTURES CONTRACT. USFE.

External Links[edit]

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