New contracts from ICE Futures US
ICE is an Intercontinental Exchange that is a global operator of futures exchanges and over-the-counter (OTC) markets. Today ICE made an announcement saying that ICE Futures US will start million-currency-unit versions of 12 current forex futures contracts in the November 2008. These new contracts are called ICE Millions. They include advantages of futures and OTC products as well and provide current forex market with transactional efficiencies and risk management methods.
According to Ray McKenzie a Vice President and Head of Sales for ICE Futures US all forex market members like traders, hedge funds and etc were looking for better opportunities in terms of cost, transparency and straight through processing in the forex markets. New futures contracts reflecting cash market trading conventions and being more effective than the old ones are nothing but the new and quite valuable forex tool for the global members of the market.
It is supposed that the new contracts will be traded electronically via ICE trading platform that provides the shortest execution times in the industry of futures nowadays. As for the prices of the contracts they are supposed to be quoted with the help of over-the-counter market convention. For instance, Million Euro – USD contract will be quoted in USD per Euro to five decimal places. The common rate for the new contracts is $1.35 per side or per million currency unit including also fees on exchange and clearing.
Initially there are such advantages of ICE Millions contracts as:
- The cost of transaction efficiencies when compared to current futures and OTC proposals;
- High liquidity with experiences market makers;
- Anonymity of transactions and centralized clearing that are integral parts of the futures market transactions;
- Easy exposure of hedging cash with OTC contract design and quotation methodology;
- No need to roll cash positions for a day;
- Compatibility of the current ICE forex contracts at the ratio of ten-to-one.
