Single stock futures

RECENT NEWS
Mondo Visione  Jan 27  Comment 
Euronext, a wholly owned subsidiary of IntercontinentalExchange Group (NYSE: ICE), today announced the launch of an enlarged suite of Single Stock Futures on a range of its most liquid Euronext listed stocks.   The launch enhances the existing...
FX Street  Sep 24  Comment 
As if a standard futures contract — those that control an underlying commodity, stock index,... For more information, read our latest forex news and reports.
Mondo Visione  Jun 24  Comment 
NASDAQ OMX (NASDAQ: NDAQ) today announced the introduction of cash settled single stock futures on Norwegian, Danish and Swedish securities. The new instruments are similar to existing physically settled single stock futures, but settlement will...
The Hindu Business Line  Mar 11  Comment 
Even though badla remains irrevocably banned, Indian investors seem to favour derivative products which effectively resemble badla trades.
Mondo Visione  Aug 28  Comment 
Eurex's Single Stock Futures have undergone an exceptionally positive development. The number of tradable products as well as the trading volumes have continuously increased. Eurex market participants are now able to trade Single Stock Futures on...
Mondo Visione  Jun 8  Comment 
On June 14, 2011 futures and options contracts will be settled through the unified settlement technology implemented on FORTS and RTS Standard. Settlement schedule is the following:  June 14 The last trading day for single stock...
Mondo Visione  Jun 7  Comment 
The international derivatives exchange Eurex today announced that it will launch 19 single stock futures (SSF) on leading Polish companies on 27 June 2011. The new listings reflect customer demand for derivatives based on shares from one of the...
Mondo Visione  Mar 21  Comment 
The Thailand Futures Exchange Plc (TFEX), part of The Stock Exchange of Thailand, began trading 16 single stock futures with 16 more underlying SET50 stocks from 9 sectors today (March 21), bringing the total number of underlying stocks to 30....
Mondo Visione  Nov 23  Comment 
Eurex, the international derivatives exchange, today announced that it will launch single stock futures on leading Canadian companies on 25 November 2010. The new listings reflect customer demand for expanded offerings in the rapidly growing...
Mondo Visione  Sep 22  Comment 
Tehran Stock Exchange (TSE)'s first seminar on the investment opportunities at the Exchange's single stock futures market was held on September 21 at hotel Espinas Tehran.




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Single Stock Futures (SSF's) are securities that share some of the features of equities and also some of traditional commodity futures contracts. They are traded in various financial markets, including those of the United States, United Kingdom, Spain, India and others. South Africa currently hosts the largest single-stock futures market in the world, trading on average 700,000 contracts daily[1].

In the United States, they were disallowed from any exchange listing in the 1980s because the Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission were unable to decide which would have the regulatory authority over these products.

After the Commodity Futures Modernization Act of 2000 became law, the two agencies eventually agreed on a jurisdiction-sharing plan and SSF's began trading on November 8, 2002.

Two new exchanges initially offered security futures products, including single-stock futures, although one of these exchanges has since closed. The remaining market is known as OneChicago because it is a joint venture of three Chicago-based exchanges, the Chicago Board Options Exchange,CME Group ( formerly the Chicago Board of Trade and the Chicago Merc). In 2006, the brokerage firm Interactive Brokers made an equity investment in OneChicago and is now a part-owner of the exchange.

SSFs have yet to gain significant popularity among securities & derivatives traders in the United States. Daily total contract volume [2] averaged approximately 35,000 contracts/day in 2007. Although 2007 total annual volume did increase 100% over 2006, volumes are still small in comparison to more established derivative contracts. For example, U.S. equity & ETF options trade approximately 6,000,000 contracts/day.

Single stock futures values are priced by the market in accordance with a theoretical pricing model based on a formula:

Futures Price = underlying stock price X (1+ annualized interest rate - dividend)

The SSF's valuation with its Interest Rate component allows one to set a competitive rate of financing when using a margin account.

Another valuation of single stock futures can be found through the following:

F = [S - PV(Div)] * e^(r*(T-t))

where S is the price of the underlying (the stock price), PV(Div) is the present value of any dividends entitled to the holder of the underlying between T and t, r is the risk free rate, and e is the base of the natural log. F is of course the price of the single stock futures contract. [3]

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