IntercontinentalExchange wins trading rights for Russell equity indexes

If the CME keeps losing their fastest growing products like ER2 - they are going to end up like a utility company with a low PE ratio to match.

They best get with the program. The future is electronic trading without legacy/pit impediments.
 
If ICE was smart they would offer free quotes on their version of the Russell 2000 for the first year or so. This would ease the transition.

I hope the CME bounces back with something good. I've always thought that a high beta index like the old NYSE beta index would be a good product to trade. It would also give high beta stock trading funds a tool to hedge with.

Consolidation is nice, but product growth is the key.
 
What is this going to do the price of a GEM badge at the merc? This seemed to be one of the main reasons to own a GEM seat. jim
 
I think this will force the CME to lower the tick size / min price variation in the ES.

If they change the ES to .1 or .05,
the ICE Russell will probably not become liquid.

Reason: 70% of all ER2 traders use this vehicle because its better MPV
 
Quote from local_crusher:

I think this will force the CME to lower the tick size / min price variation in the ES.

If they change the ES to .1 or .05,
the ICE Russell will probably not become liquid.

Reason: 70% of all ER2 traders use this vehicle because its better MPV
More...

No, they should just make the SP contract electronic full time.
ES would then be redundant, as all volume would move to SP.

But they dont want to do this because they will lose 5x the commisions they currently get on ES.

As a compromise they should do an ES at $10 dollars a tick and a 0.1 tick size. Twice the size and half the spread it is now, but they will still lose half the volume and charges so this will probably not happen either.
 
Quote from amiindew:

Merc fills loss to ICE with S&P futures

http://www.chicagotribune.com/business/chi-wed_cbotjun20,0,2214508.story?coll=chi-business-hed
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They need to get S&P to regig how they calculate the value of their small cap index (reverse stock split!), its currently around 440 and should be twice (or even better 3 times) that.

Alternatively CME could use a 50 contact multiplier instead of the customary 100.

The third option is to use 0.05 ticks at $10 dollars a tick.

If they dont do any of the above it wont be a suitable replacement and wont get the liquidity.
 
From SeekingAlpha.com:

"In a further twist, the day after the announcement regarding the ICE, the CME announced that it would begin listing E-mini Small Cap Stock Index futures contracts based on the S&P SmallCap 600 Index. The CME says that it will offer trading incentives and execution facilities that will encourage traders who have previously used the Russell 2000 contracts to use the new S&P-based contract. The exchange already lists a full-size contract based on the S&P SmallCap 600 Index, but its volumes are extremely thin.

Mary Haffenberg, associate director of product communications at the CME, does not classify the E-mini Small Cap Stock Index futures as a replacement for the E-mini Russell 2000 futures and says the exchange is responding to demand from investors for more small-cap trading vehicles. “It’s to give investors another way to trade that type of product,” she says."


Article with interesting insigths from a veteran trader:
http://www.themoneyblogs.com/eminis/my.blog/er2-from-cme-to-ice-.html


Has anyone comments on the following Mini Russell Futures Contract to be launched by the CBOE on July 07?
http://cfe.cboe.com/Products/Spec_VR.aspx
 
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