CME Group is reportedly planning to launch binary options trading to attract more retail traders, despite being banned by most European regulators.
According to the Financial Times, the ‘event contracts’ would be offered in September, allowing individuals to trade their views on daily up or down price moves in CME futures markets.
Customers can place trades by swiping a phone screen on the website for the new contracts. Professional traders and financial institutions make up the majority of CME’s customer base. A trader can buy up to 250 event contracts at a time, with each contract worth up to $20.
Several European countries have prohibited trading in the contracts, with the UK’s Financial Conduct Authority comparing them to “gambling products disguised as financial instruments.” As of now, CME’s new products are aimed at US-based traders. The CFTC has warned against binary options trading on unregistered platforms in the US. For US-listed derivatives, CME's exchanges are the dominant venue. The contracts will be listed once the regulatory review is complete.
The North American Derivatives Exchange , owned by Crypto.com of Singapore, will compete with CME. In addition, a Chicago-based and US-registered binary contract exchange, Nadex, offers currency, commodity and index contracts.
CME Group's FX Link Reaches Record Daily Volume
As of June 16, 82,900 contracts exchanged hands on FX Link, setting a new record for a single day on the derivatives platform. Over $7.2 billion was the notional value of these contracts.
A previous daily volume peak of 77,146 contracts was recorded on March 10, 2020. A new record was set on the US derivatives platform as 26,677 contracts were traded, worth over $2.5 billion in notional value. The average daily volume (ADV) of FX Link tripled in June 2022, from nearly 15,000 contracts to over 43,000 contracts.
CME launched FX Link in 2018. In addition to spot FX basis spreads, it connects the FX futures contract with the OTC FX market. The program aims to provide improved access and utilization of FX futures by OTC FX market participants.
