CME Nixes Futures On ETFs

by on December 16, 2010 | ETFs Mentioned:

The Chicago Mercantile Exchange will soon stop listing futures contracts on ETFs according to the Wall Street Journal, pulling the plug after the products failed to generate much interest among investors. The CME has listed futures on the NASDAQ 100 QQQ (QQQQ), S&P 500 SPDR (SPY), and Russell 2000 Index Fund (IWM) since 2005, but won’t be listing any new futures contracts linked to ETFs. “The products weren’t that liquid and deep,” said Scot Warren, managing director of equity indexes for CME, according to WSJ. “It wasn’t appropriate to put that level of investment on something with that little liquidity.”

The low trading volumes on futures contracts doesn’t necessarily reflect a lack of interest in ETFs; futures contracts linked to the indexes underlying ETFs have always been popular, and investors have been slow to make the switch to futures contracts linked to ETFs instead.

According to the CME, there were recently 19 open positions in the December position for SPY, eight open positions for the January contract, and one open contract for December. For QQQQ and IWM there were nine and five open December contracts, respectively. The CME won’t delist any futures contracts while there are open positions.

Disclosure: No positions at time of writing.