U.S. Futures Exchange

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US Futures Exchange
Usfe logo.gif
Founded 2004, relaunched 2007, closed 2008
Headquarters 141 W Jackson Blvd, Suite 1460 Chicago, IL 60604
Products Foreign exchange, equity indexes and renewable energy futures
Website www.usfe.com

US Futures Exchange was a U.S. registered futures exchange that offered electronic trading of derivatives. It was formed in late 2006 when Man Group and its MF Global brokerage unit bought a majority stake in the US exchange formed by Eurex, which was then known as "Eurex US". The exchange was rebranded as US Futures Exchange in April 2007 focusing on trading binary contracts, which offer an all-or-nothing pay-out on a range of specific outcomes. The exchange discontinued operations on Dec. 31, 2008.[1]

Satish Nandapurkar, CEO since its inception, left the post in January 2008, and was replaced on an interim basis by John Goldsberry, with John Spiegel later named as CEO.

Business Overview

U.S. Futures Exchange (USFE) concentrated on developing products to attract the retail market with mini-sized equity foreign equity index products and currency products. USFE tried to use a low-cost structure to provide a “turnkey” platform for the listing of products developed in partnership with third parties.[2]

Clearing was provided by The Clearing Corporation[3], the platform was operated by Deutsche Boerse Systems, and it was regulated by the National Futures Association.

The USFE had a page on MySpace, the social networking platform, though this has since been pulled.[4]

Shareholders

The spin-off of MF Global made it the largest single shareholder in the USFE, with a 49.9 percent stake, with Man Group’s holding reduced to 17 percent. Both companies committed to a proportionate reduction in their holdings to bring in other partners, but the rogue-trading scandal and other issues that dogged MF Global complicated those plans.[5]

Eurex had a 27 percent stake, with management and other investors holding 6.1 percent.[6]

Product Development

The new USFE launched its first product on Apr. 20, 2007, a binary future based on the outcome of the takeover battle for the Chicago Board of Trade between the Chicago Mercantile Exchange and the Intercontinental Exchange.[7]

USFE's push into the retail market saw its first foreign exchange contracts listed on Sept. 21, 2007. The FX Spot Equivalent Futures traded on a 23-hour basis, with six initial currency pairs including the U.S. dollar against the euro, yen, sterling, Swiss franc, Canadian dollar and the Australian dollar.

USFE announced on Nov. 12, 2007, that it would exclusively license the Bombay Stock Exchange’s (BSE) benchmark SENSEX Index. US dollar-denominated futures trading began on Apr. 4, 2008. USFE’s SENSEX contract allows eligible US investors to participate in India’s equity markets without requiring American Depository Receipt (ADR) authorization. The SENSEX Index is composed of 30 major Indian stocks and is regarded as the country’s premier stock market index.

The exchange launched a dollar-denominated mini-Dax contract licensed from Deutsche Borse on Oct. 1, 2008, tracking the benchmark Dax 30 and using a maker-taker pricing model.[8]

References

  1. USFE seeks new friends on MySpace. Financial Times.
  2. USFE Takes the Field with a New Game Plan. SFO Magazine.
  3. Application of U.S. Futures Exchange, L.L.C. for Designation as a Contract Market Pursuant to Sections 5 and 6(a) of the Commodity Exchange Act. U.S. Commodity Futures Trading Commission.
  4. USFE seeks new friends on MySpace. Financial Times.
  5. End of Line For Futures Exchange. The Wall Street Journal.
  6. MF Global F-1 filing. Securities and Exchange Commission.
  7. USFE Takes a Bet on Chicago Bid Outcome. Financial Times.
  8. U.S. FUTURES EXCHANGE TO INTRODUCE MAKER-TAKER PRICING MODEL FOR MINI-SIZED U.S. DOLLAR-DENOMINATED DAX FUTURES CONTRACT. USFE.

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