OneChicago enjoys single-stock futures growth

Trade in single-stock futures, long engaged in in Europe but only allowed in the United States since 2000, seems to be coming into its own, at least for OneChicago.

The electronic exchange, launched by the Chicago Board of Trade, Chicago Mercantile Exchange, and Chicago Board Options Exchange in 2002, has seen an 81 percent rise in trade compared with the same period last year.

Single-stock futures are agreements to deliver shares of a specific stock on a particular future date, called the expiration date. Trade is usually on a 20 percent margin.

OneChicago deals in 175 single-stock futures products, and companies that can be traded in this way include such well-known entities as IBM, eBay, and Philip Morris.

After a period of time when OneChicago was not as successful as its creators had hoped, its chief executive now says that customers are finding ways of using its service that had not been thought of by the exchange.

Institutional traders are making use of single-stock futures in block trading, and this form of trade is becoming popular as an alternative to stocks to hedge options trade.

This is due to the fact that trading single-stock futures allows traders to avoid some of the risks of buying cash stocks on margin.

Discuss this in the Finance Markets forums

Story link: OneChicago enjoys single-stock futures growth