OneChicago

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OneChicago
TypeSingle stock futures exchange
LocationChicago, United States
FoundedMay 14, 2001 (2001-05-14)
Owner
Key people
  • David Downey (CEO),
  • Thomas McCabe (CRO),
  • Jordan Cloud (CTO)
CurrencyUSD
No. of listings10,321
Volume11 million contracts/year (2014)
Websitewww.onechicago.com

OneChicago is a US-based all-electronic futures exchange with headquarters in Chicago, Illinois. The exchange offers approximately 12,509 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), CBOE Holdings, 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[edit]

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 the Chicago Board Options Exchange, 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.[citation needed] 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[edit]

Trading Volume[edit]

It was reported by OneChicago on January 4, 2016 that 1,476,641 contracts traded in December 2015 for a total 2015 volume of 11,714,015, up 7% from the prior year. This was a new yearly volume record for the exchange, and the third record year in a row. [9]

Electronic platforms and clearing[edit]

Delta1 is OneChicago's proprietary order matching and trade reporting platform. On October 20, 2014, Delta1 replaced the OCX.BETS platform for blocks and EFP orders and in January 2015 introduced support for a Central Limit Order Book (CLOB).

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.[10] OneChicago securities futures may be traded in either a securities account or a futures account.[11]

Products[edit]

Securities Futures Contracts[edit]

The exchange offers 13,380 (as of January 20, 2016) security futures, including 2662 futures on exchange-traded funds and 1846 No Dividend Risk.[12] 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. OneChicago offers traditional monthly (SSQQ) and weekly expiration cycles.

The No Dividend Risk products treat ordinary dividends as corporate events by adjusting the previous days’ settlement price by the dividend amount the morning of the Ex-dividend Date.

Weekly Spreads[edit]

An expiring weekly spread is an exchange traded centrally cleared alternative to traditional OTC stock loan and dealer equity repo. If you own stock, buying the expiring weekly spread, (meaning buy the deferred expiration and sell the expiring) closes out your stock position and establishes a long futures position, thus transferring your delta from the stock to the future. Your stock position is closed out by delivering the stock to fulfill your short future obligation the next day while your long position is maintained by your futures position.

If the underlying stock is hard to borrow, the hard to borrow premium is reflected in the futures buy price being lower than the stock sale price. In essence, you are synthetically loaning out your stock and collecting the hard to borrow premium.

If the underlying stock is general collateral, the repo rate is reflected in the futures buy price being higher than the stock sale price. In essence, you are monetizing your stock and are paying interest on the sale proceeds.

Exchange Future for Physical (EFP)[edit]

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.[13] 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 Delta1 (formerly OCX.BETS) platform.[14]

See also[edit]

References[edit]

  1. ^ http://www.onechicago.com/?page_id=1129
  2. ^ "Single-Stock Futures Open for Trading", The New York Times, November 9, 2002.
  3. ^ a b 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=23965
  10. ^ http://www.onechicago.com/?page_id=47
  11. ^ http://www.onechicago.com/?page_id=114
  12. ^ http://www.onechicago.com/?page_id=756
  13. ^ http://www.onechicago.com/?page_id=27
  14. ^ http://www.onechicago.com/?p=18508

External links[edit]