CME Group Launches Event Contracts for Retail Investors

The Chicago Mercantile Exchange (CME) Group, one of the world’s largest derivatives marketplaces, launched event contracts for retail investors on Monday to trade global benchmark products.

Previously, the Group announced the planned launch of the event contracts in June.

The CME Group's event contracts give individual investors the ability to trade on end-of-day price movements of key futures markets such as natural resources, currencies and indexes, CME Group said.

Each event contract is capped at $20 per contract, the derivatives marketplace organizer said, adding that investors will be able to determine their maximum profit or loss when entering a trade.

Tim McCourt, the Global Head of Equity and FX Products at CME Group, noted that the exchange’s event contracts will provide investors with “innovative, lower-cost ways to trade across oil, gold, equity indices and foreign currencies.”

The contracts cover various futures markets index-based benchmark products such as the E-mini Dow Jones Industrial Average, E-mini Russell 2000 and E-mini S&P 500.

"We continue to see increasing demand from retail investors looking for less-complex ways to gain exposure to and participate in CME Group benchmark products, some of the world's most widely quoted futures markets,” McCourt noted.

In the statement announcing the launch, Interactive Brokers, CQG, NinjaTrader, Dorman Trading and Ironbeam stated that they will be onboarding CME Group's event contracts on their trading platforms.

"Interactive Brokers is excited to launch event contracts and to offer our clients the ability to trade their opinion on yes-or-no questions," said Steve Sanders, Interactive Brokers’ Executive Vice President of Marketing and Product Development.

Are Binary Options Back?

CME Group's event contracts are binary options-styled contracts. A binary option enables a trader to get a payout by predicting if the price of an asset will rise or fall.

It typically pays a fixed amount or nothing at all, depending on whether the trader wins or loses the prediction.

However, binary options is a controversial financial instrument that has been banned in several jurisdictions including in the United Kingdom, European Union (EU), Canada, Australia and Israel.

Nonetheless, the United States, which has one of the strictest regulated financial markets, permits binary options contracts in a highly regulated environment.

This is contrary to that the fact that the US forbids the trading of contracts for difference (CFD) which is permitted in the UK and across Europe.

In June, a CME Group spokesperson told Finance Magnates that the event contracts the company was planning to launch in the United States are not the same as CFDs and binary options that have been banned in the UK and EU.

"While CFDs and binary options in the UK and Europe settle prices determined by their brokers, CME Group event contracts will settle based on a regulated futures market with transparent prices,” the spokesperson said.