Russell Investments

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Russell Investments
Founded	1936
Headquarters	Tacoma, U.S.
Key People	Craig Ueland, president and CEO; Kelly Haughton, strategic director, Russell Indexes
Products	Asset management and equity indexes
Web site	http://www.russell.com/us/SiteNav.asp

Russell Investments is a U.S.-based asset management and investment consulting group, and creator of an eponymous family of benchmark equity indexes. The company is a unit of Northwestern Mutual Life Insurance and managed $228 billion in assets at the end of 2007.

The company offers 26 U.S. indexes - including the Russell 1000 and the Russell 2000 - which have spawned a host of derivatives contracts traded on a number of U.S. exchanges. The IntercontinentalExchange (ICE) has an exclusive deal to list Russell-based contracts from the third quarter of 2008. ICE successfully transitioned the U.S. Russell Index complex to ICE Futures U.S. (formerly the New York Board of Trade) in September of 2008.

History

The company was founded in 1936 as a brokerage by Frank Russell in Tacoma, Washington state, and expanded as the Frank Russell Company through moves into pension fund consulting in 1969 and then fund management in 1980.

The Russell 1000, Russell 2000 and Russell 3000 indexes were created in 1984 to provide a benchmark for fund manager performance. Northwestern Mutual acquired the business in 1999, renaming it the Russell Investment Group in 2003.^[1]

Products and Services

Russell's 26 US indexes represent nine of the top 10 benchmarks in terms of the number of products as well as the amount of assets, surpassed only by the S&P 500 index^[2].

The U.S. family is based on the Russell 3000. The large-cap Russell 1000 Index incorporates the largest 1,000 companies in the Russell 3000, with the balance used to form the Russell 2000. The indexes are reconstituted annually on the last Friday in June, with IPOs added on a quarterly basis.

The indexes have been used to create a range of products - including index futures and options and ETF futures and options - traded on exchanges including: the American Stock Exchange; NASDAQ; Chicago Board Options Exchange, the IntercontinentalExchange (ICE), the New York Board of Trade, the International Securities Exchange, NYSE Arca, the Philadelphia Stock Exchange and the Chicago Mercantile Exchange.

The ICE has signed an exclusive agreement^[3] to list futures and options based on the indexes and will become the sole host from the third quarter of 2008. ^[4]

According to ICE, some enhancements will occur in the environment for Russell trading, including:

• Trade at Index Close, which allows a market participant to enter bid or offer for mini Russell index futures contracts at a price pegged to the close of the underlying Russell index. In our preview discussions with buy-side market participants, the reaction to this functionality was overwhelmingly positive: traders offered comments that the TIC trade would provide a better way to manage cash flows, create better hedging transactions for market at close transactions, and reduce tracking error.

• The Average Price System, will allow transactions to be reported at a single price. This capability has been requested by institutional (and other) customers to facilitate trading in the ICE Russell contracts.

• Mini Russell serial options on the ICE platform to be offered in electronic trading. Mini Russell quarterly options are available on the ICE trading platform now. Serial month options on regular size and mini-size Russell futures contracts are available only at ICE. The Russell full size and mini serial options are currently traded via open outcry on the trading floor and will continue to be available on the floor after they are listed electronically. Russell full-size options are not available for electronic trading.

• ICE is also planning the implementation of a procedure to price spreads by using the previous day's settlement price for the front month (the anchor leg) of a Russell spread trade. The price for the back-month transaction will be calculated by applying the spread differential to the front-month anchor price. An exchange notice with more details will be available shortly.

The Russell Global Index was launched in January 2007, using the Russell 3000 Index as its U.S. component, and divided into 300 core indexes covering 22 regions and 63 countries.^[5]

References

1. ↑ Company Profile. Russell Investments. Retrieved on April 22, 2008.
2. ↑ Press Release. Russell Investments. Retrieved on January 25, 2008.
3. ↑ Press release. ICE. Retrieved on January 25, 2008.
4. ↑ ICE wins Russell futures deal. Financial Times. Retrieved on January 25, 2008.
5. ↑ Press release. Russell Investments. Retrieved on January 25, 2008.