Interest rate futures have taken nearly three rate cuts (0.68%) out of their 2007 Fed expectations.
Trading in interest rate futures fell almost 30% in December 2011 compared to the previous year.
The Actuarial Exchange of Chicago filed notice in January 2004 that it would begin trading interest rate futures.
It will hold a titanium grip on trading in interest rate futures and indexes, and a firm control over the markets for agricultural and other commodities.
New York Portfolio Clearing which is a startup clearing house co-owned by NYSE Euronext, has gained approval from the U.S. Commodity Futures Trading Commission to clear interest rate futures in the United States.
The Merc has been eager to expand off its traditional strength in interest-rate futures trading.
Fewer than 700, 000 short-term interest-rate futures contracts traded on the Chicago Mercantile Exchange just six years ago.
These involve selling short-term December 1999 interest-rate futures contracts and buying September 1999 and March 2000 ones, on the assumption that short-term rates will spike over the millennium because of extra demand for cash.
All the same, the usually predictive Fed-funds futures market is pointing to another interest-rate cut of half a percentage point at the Fed meeting at the end of this month.
It is a founding member of ERIS, which has developed a futures contract that mimics a variable Libor-based interest rate swap.
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The futures market was pricing in some chance of an interest-rate hike before the year is out.
Eurodollar futures and options, where investors hedged or speculated on the interest rate paid on a 90-day deposit of a dollar overseas, were half of the Merc's business, with 1.5 million contracts traded per day.
Duffy and Donohue argued that the two exchanges rarely competed directly, and that their chief competition wasn't other futures markets but the vastly larger markets in over-the-counter derivatives like interest-rate swaps.
Yet, even after the central banks' announcement, dealers cited by TradeTheNews.com said that some interest rate spreads were still high, with the TED spread (which is price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars) still above 30 basis points.
But last month, when the French futures exchange, Matif, opened electronic markets alongside its pits, trading in short-term interest-rate contracts quickly migrated to the computers.
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