OneChicago

OneChicago
Type Single stock futures exchange
Location Chicago, United States
FoundedMay 14, 2001
Owner
Key people
  • David Downey (CEO),
  • Thomas McCabe (COO),
  • Mark Esposito (Managing Director of Business Development),
  • Waseem Barazi (Chief Regulatory Officer)
CurrencyUSD
No. of listings2,272
VolumeUSD 4.97 million/year (2010)
Websitewww.onechicago.com

OneChicago is a US-based all-electronic futures exchange with headquarters in the Chicago Board of Trade Building in Chicago. The exchange offers approximately 2,272 single-stock futures (SSF) products[1] with names such as IBM, Apple and Google. All trading is cleared through Options Clearing Corporation (OCC).

The exchange is owned jointly by IB Exchange Group (IB), Chicago Board Options Exchange (CBOE), and CME Group. It is a privately held company that is regulated by both the Securities and Exchange Commission and the Commodity Futures Trading Commission.

History

The Commodity Futures Modernization Act of 2000 legalized U.S. trading in single-stock futures, and two exchanges began operations in November 2002.[2] OneChicago began as a joint venture of CBOE, the Chicago Mercantile Exchange, and the Chicago Board of Trade.[3] The other exchange, NQLX (owned by Euronext.liffe), closed in December 2004[4] and assigned its remaining contracts to OneChicago. In 2006, IB bought 40% of OneChicago, with Chicago Mercantile Exchange and CBOE each retaining 24% and the remainder belonging to the Chicago Board of Trade and OneChicago management.[3] (The Chicago Mercantile Exchange and the Chicago Board of Trade merged in 2007 to form CME Group.[5])

Peter Borish served as Chairman of OneChicago.[6][7][8]

Operations

Trading Volume

It was reported by OneChicago on January 2, 2014 that 1,174,205 contracts traded in December 2013 for a total 2013 volume of 9,515,194, up 48% from the prior year. This was a new yearly volume record for the exchange.[9]

Electronic platforms and clearing

OneChicago operates two trading platforms for securities futures. The first utilizing the CBOEdirect electronic trading platform and the second OneChicago’s institutional based system for blocks and EFP’s called B.E.T.S. ISV connect to either platform; trading can also be done via an API connection to CBOEdirect.[10]

Members of the CME Group and CBOE are automatically members of OneChicago and any clearing member of the Options Clearing Corporation who is permissioned for Security Futures can also route orders for execution.[11] OneChicago securities futures may be traded in either a securities account or a futures account.[12]

Products

Securities Futures Contracts

The exchange offers 2,272 (as of April 8, 2011) security futures, including 9 narrow-based indexes, 298 futures on exchange-traded funds and 826 OCX.NoDiv.[1] A OneChicago single stock futures contract is an agreement to deliver 100 shares of a specific stock at a designated date in the future, called the expiration date. In most cases, four expiration dates are available for trading OneChicago single stock futures.[13] The traditional futures symbol will consist of the underlying ticker symbol plus “1C”. For instance, the traditional DIA futures will trade as DIA1C.

The OCX.NoDivRisk products trade side by side with the OneChicago’s traditional futures product.[14] OCX.NoDivRisk products treat ordinary dividends as corporate events by adjusting the previous days’ settlement price by the dividend amount the morning of the Ex_Date. The OCX.NoDivRisk symbol will generally consist of the underlying ticker symbol plus “1D”. For instance, DIA OCX.NoDivRisk futures will trade as DIA1D.[15]

Exchange Future for Physical (EFP)

An Exchange Futures for Physical (EFP) is a combination order to buy (or sell) an amount of underlying stock and simultaneously sell (or buy) the equivalent number of SSFs with a counterparty who buys (or sells) the corresponding underlying (or SSF). EFP trading allows for the trade of a short (or long) underlying position for a short (or long) SSF position.[16] An EFP, as an integrated transaction, has no market exposure risk as the Stock and the SSF have identical delta values. The two parties to the transaction are simply shifting to an equivalent position on more favorable financing terms.

As of the close of business on May 14, 2014, OneChicago suspended trading in competitive EFPs. Privately negotiated, off-exchange EFPs may still be transacted by market participants and then reported on OneChicago's OCX.BETS platform.[17]

References

  1. ↑ 1.0 1.1 http://www.onechicago.com/?page_id=756
  2. ↑ "Single-Stock Futures Open for Trading", The New York Times, November 9, 2002.
  3. ↑ 3.0 3.1 Liz Moyer, "The Wallendas Hit Wall Street", Forbes, March 22, 2006.
  4. ↑ Lind-Waldock, The Complete Guide to Futures Trading: What You Need to Know about the Risks and Rewards (John Wiley and Sons, 2006), ISBN 978-0-470-05559-5, p. 121. Excerpt available at Google Books.
  5. ↑ Christine Stebbins, "CBOT shares cease trading at Thursday close", Reuters, July 12, 2007.
  6. ↑ Samuel A. Schreiner (2013). The World According to Cycles: How Recurring Forces Can Predict the Future and Change Your Life. Skyhorse Publishing, Inc. Retrieved April 21, 2014.
  7. ↑ "ONECHICAGO announces Peter Borish as Chairman", ONECHICAGO, October 7, 2004
  8. ↑ Michael W. Covel (2012). Trading the Trend (Collection). FT Press. Retrieved April 21, 2014.
  9. ↑ http://www.onechicago.com/?p=17511
  10. ↑ http://www.onechicago.com/?page_id=7
  11. ↑ http://www.onechicago.com/?page_id=47
  12. ↑ http://www.onechicago.com/?page_id=114
  13. ↑ http://www.onechicago.com/?page_id=118
  14. ↑ http://www.onechicago.com/?page_id=3583
  15. ↑ http://www.onechicago.com/wp-content/uploads/content2010/OCX%20NoDiv%20Product%20Memo.pdf
  16. ↑ http://www.onechicago.com/?page_id=27
  17. ↑ http://www.onechicago.com/?p=18508

External links