OneChicago, LLC
Encyclopedia
OneChicago is an all-electronic exchange owned jointly by IB Exchange Group
Interactive Brokers
Interactive Brokers Group, Inc. is an online discount brokerage firm in the United States. The company traces its origin to 1977 when Thomas Peterffy bought a seat on the American Stock Exchange as an individual market maker, and formed T.P. & Co. the following year...

 (IB), Chicago Board Options Exchange
Chicago Board Options Exchange
The Chicago Board Options Exchange , located at 400 South LaSalle Street in Chicago, is the largest U.S. options exchange with annual trading volume that hovered around one billion contracts at the end of 2007...

 (CBOE), and CME Group
CME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...

. It is a privately held company that is regulated by both the Securities and Exchange Commission and the Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

. The OneChicago corporate headquarters is located in the Chicago Board of Trade Building
Chicago Board of Trade Building
The Chicago Board of Trade Building is a skyscraper located in :Chicago, Illinois, United States. It stands at 141 W. Jackson Boulevard at the foot of the LaSalle Street canyon, in the Loop community area in Cook County. Built in 1930 and first designated a Chicago Landmark on May 4, 1977, the...

 in Chicago's financial district. OneChicago offers approximately 2,272 single-stock futures
Single-stock futures
Single-stock futuresIn finance, a single-stock futures is a type of futures contracts between two parties to exchange a specified number of stocks in company for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

 (SSF) products with names such as IBM, Apple and Google. All trading is cleared through Options Clearing Corporation
Options Clearing Corporation
Options Clearing Corporation or OCC, founded in 1973, is the world's largest equity derivatives clearing organization, providing central counterparty clearing and settlement services to 14 exchanges and platforms for options, financial and commodity futures, security futures and securities...

 (OCC). OneChicago currently operates the only U.S. based securities futures marketplace.

History

The Commodity Futures Modernization Act of 2000
Commodity Futures Modernization Act of 2000
The Commodity Futures Modernization Act of 2000 is United States federal legislation that officially ensured the deregulation of financial products known as over-the-counter derivatives. It was signed into law on December 21, 2000 by President Bill Clinton...

 legalized U.S. trading in single-stock futures, and two exchanges began operations in November 2002. OneChicago began as a joint venture of CBOE, the Chicago Mercantile Exchange
Chicago Mercantile Exchange
The Chicago Mercantile Exchange is an American financial and commodity derivative exchange based in Chicago. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a non-profit organization...

, and the Chicago Board of Trade
Chicago Board of Trade
The Chicago Board of Trade , established in 1848, is the world's oldest futures and options exchange. More than 50 different options and futures contracts are traded by over 3,600 CBOT members through open outcry and eTrading. Volumes at the exchange in 2003 were a record breaking 454 million...

. The other exchange, NQLX (owned by Euronext.liffe), closed in December 2004 and assigned its remaining contracts to OneChicago. 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. (The Chicago Mercantile Exchange and the Chicago Board of Trade merged in 2007 to form CME Group.)

Trading Volume

It was reported by OneChicago on January 4, 2011 that "637,012 security futures contracts traded at the Exchange in December 2010, up 83% over December 2009. The total 2010 trading volume was 4,971,160; up 67% from 2009."

Electronic platforms and clearing

OneChicago operates two trading platforms for securites futures. The first utilizing the CBOEdirect electronic trading platform and the second OneChicago’s institutional based system for blocks and EFP’s called B.E.T.S. ISV
Independent software vendor
Independent software vendor is a business term for companies specializing in making or selling software, designed for mass marketing or for niche markets...

 connect to either platform; trading can also be done via an API
Application programming interface
An application programming interface is a source code based specification intended to be used as an interface by software components to communicate with each other...

 connection to CBOEdirect. Members of the CME Group and CBOE are automatically members of OneChicago and any clearing member of the Options Clearing Corporation
Options Clearing Corporation
Options Clearing Corporation or OCC, founded in 1973, is the world's largest equity derivatives clearing organization, providing central counterparty clearing and settlement services to 14 exchanges and platforms for options, financial and commodity futures, security futures and securities...

 who is permissioned for Security Futures can also route orders for execution. OneChicago securities futures may be traded in either a securities account or a futures account.

Products

Securities Futures Contracts

The exchange offers 2,272 (as of April 08, 2011) security futures, including 9 narrow-based indexes, 298 futures on ETFs and 826 OCX.NoDiv. 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. In most cases, four expiration dates are available for trading OneChicago single stock futures. The traditional futures symbol will consist of the underlying ticker symbol plus “1C”. For instance, the traditional DIA futures will trade as DIA1C.

The OCX.NoDivRisk products trade side by side with the OneChicago’s traditional futures product. OCX.NoDivRisk products treat ordinary dividends as corporate events
Corporate action
A corporate action is an event initiated by a public company that affects the securities issued by the company. Some corporate actions such as a dividend or coupon payment may have a direct financial impact on the shareholders or bondholders; another example is a call of a debt security...

by adjusting the previous days’ settlement price by the dividend amount the morning of the Ex_Date. The OCX.NoDivRisk symbol will generally consist of the underlying ticker symbol plus “1D”. For instance, DIA OCX.NoDivRisk futures will trade as DIA1D.
Exchange Future for Physical (EFP)

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 conterparty 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. 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.

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
x
OK