Provides More Precise, Convenient Trading of U.S. Dollar vs. Basket of Major Currencies
CME Group, the world’s leading and most diverse derivatives marketplace, and Dow Jones Indexes, a leading global index provider, today announced the launch of the new Dow Jones CME FX$INDEX. The index will serve as the basis of a new futures contract, which is expected to launch in the third quarter 2010. The contracts will be listed with, and subject to, the rules and regulations of CME.
The new index combines six currency futures and represents the relative value of the U.S. dollar versus six major currencies. The currencies included are the Australian dollar, British pound, Canadian dollar, Euro, Japanese yen, and Swiss franc. The Dow Jones CME FX$INDEX futures contract will provide a more efficient way for global market participants to trade a basket of six major currencies against the U.S. dollar.
"When we launched our joint venture with Dow Jones, the goal was to leverage the collective strengths of both companies and create new index benchmarks across multiple asset classes, as well as develop customized index products," said Scot Warren, CME Group’s managing director of Equity Index Products and Services. "The launch of the new Dow Jones CME FX$INDEX and the futures contract based on the index is the perfect intersection between index calculation and product development."
"This new currency index leverages Dow Jones Indexes’ capabilities and CME Group’s distribution experience and leading role in currency futures," said Michael A. Petronella, president Designate, Dow Jones Indexes. "The methodology as developed by CME Group includes currency-weighting of the index to reflect the economic realities as indicated by current Fed data, which makes the index a suitable strategic hedging instrument for market participants. This project is one example of how our joint venture will work to bring differentiated index products to market."
"Market participants have long shown an interest in trading a basket of currencies against the U.S. dollar as a means of managing their risk," said Derek Sammann, CME Group’s managing director of FX and Interest Rate Products. "This new contract provides an easier way for customers to more precisely and conveniently lay off global currency risk with a single index. Additionally, portfolio managers can dynamically hedge their positions against the index using the six most liquid currency contracts traded at CME."
The Dow Jones CME FX$INDEX represents a basket of the most frequently traded CME FX futures (Australian dollar, British pound, Canadian dollar, Euro FX, Japanese yen, and Swiss franc contracts) all traded against the U.S. dollar. The index is currency weighted and inversely quoted. When the U.S. dollar strengthens against the basket of currencies, the index goes down and when the dollar weakens against the basket of currencies, the index goes up. The Dow Jones CME FX$INDEX is calculated as the basket value divided by US$10,000.
The Dow Jones CME FX$INDEX futures contract is designed for efficient hedging against the basket of currencies represented in the index.
Additional benefits include:
* Access to more than $100 billion (USD) in daily FX liquidity
* The safety and security of CME Clearing
* Transparent market pricing
* Electronic access around the world, around the clock on CME Globex
* Ability to manage your entire currency portfolio with CME FX Products
