Which SSF exchange has better volume?

Discussion in 'Financial Futures' started by Sharp, Jun 26, 2003.

  1. Sharp


    Which SSF exchange has better volume? I have never traded SSF's before because there was not much liquidity so I am wondering which exchange has better volume now NQLX or ONE?
  2. or maybe not ...


    In 2003 through May, OneChicago LLC, an electronic exchange for single-stock futures, has the volume lead over its New York-based competitor, NQLX. OneChicago is a venture of the Chicago Mercantile Exchange, Chicago Board Options Exchange and the Chicago Board of Trade.2003 monthly volume, in number of contracts
    OneChicago NQLX
    May 101,689 50,077
    April 79,353 51,098
    March 79,522 55,485
    February 94,321 69,275
    January 111,538 108,710SOURCES: OneChicago LLC, NQLX

    Nasdaq to exit single-stock futures

    June 27, 2003

    BY DAVID ROEDER Business Reporter

    Conceding ground to Chicago's exchanges, the Nasdaq stock market said Thursday it will relinquish ownership of a trading venture in single-stock futures and discontinue other operations to concentrate on building revenue from new listings.

    Nasdaq said it will give up its stake in Nasdaq Liffe Markets LLC, an electronic trading arena for single-stock futures that competes with OneChicago LLC, owned by three local exchanges. The two have been competitors since single-stock futures debuted last fall, with OneChicago leading in market share the first five months of this year.

    The Nasdaq Liffe exchange will continue under the name of NQLX and under full ownership of London's futures exchange, known by the acronym Euronext.liffe. Financial terms of Nasdaq's transfer of its interest to Euronext were not disclosed.

    The transition could create an opening for OneChicago to grab more of single-stock futures trading, a potentially rich source of exchange revenue in the years ahead. OneChicago's owners are the Chicago Mercantile Exchange, Chicago Board Options Exchange and the Chicago Board of Trade.

    Among traders, it's widely believed only one market for single-stock futures will survive. However, few were ready to call a winner despite the Nasdaq withdrawal.

    As a securities exchange, Nasdaq "wasn't fully committed to a futures contract,'' said Russell Wasendorf, chairman of the Chicago-based trading firm PFG Inc., which does business on both OneChicago and NQLX. He said OneChicago has benefitted from its ties to Chicago traders.

    "OneChicago started with an advantage, an existing group of traders that understood the market,'' he said.

    But Wasendorf said NQLX may be stronger under Euronext control, noting that Euronext is a leader in single-stock futures overseas and owns a widely respected computer trading platform.

    Thomas Ascher, president of NQLX, said he's encouraged that Euronext has "endorsed'' the venture. "It gives us the tremendous opportunity of building on their strength,'' he said.

    Asked if Euronext must find a partner to sustain the New York-based exchange, Ascher said, "They are more than capable of shouldering it alone.'' He called Euronext a "strong, healthy, forward-looking organization.''

    OneChicago's chairman, William Rainer, declined to comment on Nasdaq's move but said he believes the exchanges remain locked in a long-term battle.

    Single-stock futures let investors speculate on whether a given stock will rise or fall. They are distinct from futures on stock indexes, such as the Standard & Poor's 500, and were illegal in the United States until Congress authorized them in late 2000.

    OneChicago and NQLX are electronic, with no auction-style scenes in a trading floor. They opened for business last November, and while the two exchanges were roughly equal in volume at the start, OneChicago has taken the lead in market share, outrunning NQLX by a 2-to-1 ratio in May.

    Ascher, himself a longtime Chicago trader, agreed OneChicago benefits from its connections to the local exchanges. "Their members are their biggest users,'' he said.

    Rainer estimated that 63 percent of his volume emanates from Chicago's trading community.

    Nasdaq's other moves include closing a Brussels-based stock exchange in which it owns a majority stake. The decision involves the loss of 80 jobs. It also said it will cancel a proposed listing platform for companies ineligible for the Nasdaq SmallCap market and end an automated order routing system called Liquidity Tracker.

    Savvy investors the bulk of single-stock customers

    Who's trading single-stock futures? It's investors comfortable with the "futures'' part of the concept, which means those who know their way around risk.

    Trading stock is something millions of Americans do every day. But futures are more arcane, representing a bet on whether the value of an underlying stock, commodity or financial instrument will rise or fall.

    Gains can be large, but so can losses. Consequently, the customer of single-stock futures typically is a sophisticated investor, the heads of two exchanges that offer the product said Thursday.

    William Rainer, chairman of OneChicago LLC, a venture co-owned by three Chicago exchanges, said his customers include firms that advise clients on futures trading and market makers that concentrate on particular stocks. Others include managed funds and hedge funds, which are generally investments for the wealthy, and active traders, he said.

    He also said he detects a small but growing constituency of individuals who are trying out the single-stock futures concept.

    His competitor, Thomas Ascher, president of the NQLX exchange, described a similar users base, although he said he didn't detect much interest from people new to futures. A few pension funds have dabbled in the contracts, Ascher said.

    Both exchanges carry futures on about 90 popular stocks, such as IBM and Microsoft, and certain exchange-traded funds. In addition, OneChicago has added 15 Dow Jones Microsector Indexes, futures on narrowly based stock indexes.

    Stock futures are similar to options trading but can be cheaper. Margins, or performance bonds, for stock futures accounts must be at least 20 percent, less than the 50 percent that options traders must maintain.

    However, options trading can be structured to limit losses. In futures, bets can go wildly wrong and require investors to plow in more cash to meet margin calls.

    David Roeder

  3. Babak