Chicago Merc Inaugurates New Age of Electronic, Open Outcry Trading As NYSE Chairman Grasso Rings Opening Bell on E-Mini S&P 500

CHICAGO, Sept. 9 /PRNewswire/ -- New York Stock Exchange Chairman Richard A. Grasso joined officials of the Chicago Mercantile Exchange (CME) to ring the 10:30 a.m. opening bell launching trading on E-mini S&P 500 futures and options, using the futures industry's first small-order routing and execution system, including the Internet, for trading.

"The U.S. futures, equities and options markets are models for the world," Grasso said at the launch. "The CME E-mini S&P 500 offers investors another opportunity to participate in the broader market, while benefiting from an established and widely followed index. We commend the CME's efforts in developing this innovative product."

The order entry, routing and trade matching systems for all E-mini options and for 30 or fewer E-mini S&P futures is completely electronic, with orders flowing through a wide variety of means, including the Internet. Trades are executed primarily on the GLOBEX(R) electronic trading system. Larger orders, for 31 or more contracts, are executed by open outcry on the trading floor by means of an All-Or-None (AON) pit facility. AON orders allow for trading an exact quantity at a single, specified price.

E-mini S&P 500 futures are priced at $50 times the S&P index, or about $47,000 at recent trading levels. The performance bond, or margin, required to trade one contract is $2,100.

"The Merc has begun a revolution that will drastically change the landscape for individual investors," CME Chairman Jack Sandner said. "Computer-adept and financially literate individuals who want to take charge of their assets are clamoring for access to the S&P 500. As of today, they only have to click a button to trade futures and options on the U.S. equity benchmark. Those clicks, given time, will become truly the mouse that roars."

"When the Merc launched S&P 500 futures in 1982 we could only dream of the success it has realized over 15 years of trading," CME Chairman Emeritus and Senior Policy Advisor Leo Melamed said. "We offered round-the-clock S&P trading four years ago, with the launch of GLOBEX. Now, we are bringing the two together, for the investing public. The Merc's tradition of leading the futures industry and blazing the trail for new markets continues unabated."

Said CME President and CEO Rick Kilcollin: "The opportunity to manage the risk of $47,000 of equity exposure with a $2,100 performance bond is significant for the great number of individual investors who understand what role futures can play in an actively managed investment portfolio.

The CME is excited to offer this kind of product, especially on the equity benchmark S&P 500 -- expanding our long-standing successful association with Standard and Poor's."

"We're proud that the S&P 500 is the overwhelming benchmark of choice for money managers worldwide, and the E-mini S&P 500 futures and options contracts provide another opportunity to take advantage of the market's foremost index," said Harold McGraw, III, President and Chief Operating Officer of The McGraw- Hill Companies, Inc., parent of Standard and Poor's, who was an honored guest at the E-mini's launch. "More than half a trillion dollars is already directly tied to the S&P 500 index through futures, options and mutual funds. All of our efforts at Standard & Poor's and The McGraw-Hill Companies (NYSE: MHP) are tied to providing markets and people worldwide with the information and tools they need to make profitable decisions. We're excited that the E-mini S&P 500 futures and options trading adds to our long and valued partnership with the Chicago Mercantile Exchange."

On regular business days, E-mini futures and options will trade round-the- clock with the exception of the 15-minute period needed from 3:15-3:30 p.m. for daily settlement and computer maintenance. After each Friday's close, at 3:15 p.m. (Chicago time), markets will be closed until the regular GLOBEX start-up at 5:30 p.m. Sunday.

The E-mini contracts, sized at a fraction of the CME's flagship S&P 500 futures contract -- currently $500 times the index -- are expected to attract a wider range of investors, particularly many individual investors for whom the current contract size has become too large. Additionally, smaller institutions and funds may find the E-mini provides a convenient way to adjust positions, which are completely fungible with the larger sized contract.

The CME's Trade Order Processing System (TOPS Route), an "electronic pipeline" for order flow, may be used by member firms to enter orders which can go directly to GLOBEX for execution, or to generate a printed order to be executed in the pit. The CME Universal Broker Station (CUBS) -- laptop computers mounted on stands inside the pit -- aid brokers in order management and execution.

The trading pit for E-mini futures and options has been constructed in the CME's equity index complex, high above and overlooking the main S&P 500 futures pit. The pits unique design will accommodate the array of electronic trading and order routing systems which the new contract will utilize, in addition to a full complement of brokers, traders and support staff.

Two futures contract delivery months -- at launch, September and December -- and four options on futures will be listed for trading. The listed options will comprise two quarterly expirations and two nearby serial months. The minimum price fluctuation (tick) for the E-Mini will be 0.25 index points, valued at $12.50. Each day the E-mini contract's settlement price will equal the settlement price of the CME's main S&P 500 futures contract, so that spread trades between the two will require zero margin.

Individual Investors wishing to place Internet orders must have accounts with futures commission merchants (FCMs) who offer Internet trading. A number of CME currently have in place proprietary Internet order routing systems. The CME has also developed an Internet order routing system, which it is giving free of charge to firms which desire it. Currently, two firms are using the CME's system.

Employing the latest in "push" technology for the Internet, the Merc's Web site provides free, live E-mini price quotes, including the best bid and best offer and size of each. An E-mini S&P 500 Resource Center on the CME's Web site, www.cme.com, provides links to educational materials, contract highlights, price data, registration for E-mini seminars and additional S&P resources. An E-mini resource kit is available by mail from the CME by calling 888-252-6464. Nearly 8,000 kits had been requested in the first four weeks of the program, exchange officials said, with 30 percent of the requests coming electronically.

Internet users can also access an on-line simulated trading program, where they can sign up to practice trading E-mini S&P 500 contracts in a virtual simulated environment. Everyone who signs up for the simulated trading, available for $10 per month through Auditrack, Inc., is given $100,000 in simulated funds to trade.

As part of its educational efforts the Merc is holding seminars in nine U.S. and Canadian cities to introduce the product. Recent seminars in New York, Chicago, Los Angeles and San Francisco saw standing-room only crowds in each city. A joint advertising and direct mail program with the Merc's FCMs and introducing brokers has been oversubscribed, exchange officials said, with tens of thousands of brochures being sent to firms' customers with their statements.

Launched in 1982, S&P 500 futures and options are today the most widely recognized stock index contracts in the world. In 1996, the Merc traded more than 20 million futures contracts -- more than 80,000 per day -- along with a record 6 million options on those futures contracts. In 1997, the underlying value of S&P 500 futures trading has averaged more than $35 billion per day.

The Chicago Mercantile Exchange is the world leader in trading stock index products, capturing more than 95 percent of U.S. volume and open interest in stock index futures and options on futures for 1996. The new "mini" contracts will augment the Merc's family of stock index products; they will not replace the current contracts, which include the S&P/BARRA Growth and Value indexes and the S&P MidCap 400 index. The CME also trades futures and futures options on interest rate, currency and agricultural products.

The market value of the 500 firms comprising the index is equal to about 80 percent of the value of all stocks listed on the New York Stock Exchange. The S&P 500 is capitalization weighted, representing the market value of all outstanding common shares of the firms listed.

The McGraw-Hill Companies is a leading information services provider meeting worldwide needs in education, business, finance, the professions and government. Founded in 1888, the Corporation today provides information and analysis in multiple media through its rich portfolio of valuable brands. Sales in 1996 were $3.1 billion.

Further information about the Merc and its products is available on the CME World Wide Web page at www.cme.com. Standard & Poor's Website is www.stockinfo.standardpoor.com. The NYSE's Website address is www.nyse.com.

SOURCE Chicago Mercantile Exchange

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/CONTACT: Ellen G. Resnick, 312-930-3435, or William Burks, 312-930-3446, both of CME, or [e-mail]/

(MHP)

CO: Chicago Mercantile Exchange; McGraw-Hill Companies; New York Stock

Exchange; Standard & Poor's ST: Illinois IN: FIN MLM SU: PDT 

AM -- CGTU006 -- 5536 09/09/97 13:00 EDT http://www.prnewswire.com