CHICAGO, July 31,
2024 /PRNewswire/ -- ForecastEx LLC ("ForecastEx"), a
CFTC registered Designated Contract Market ("DCM") and Derivative
Clearing Organization ("DCO"), is pleased to announce the launch of
its event contract market effective August
1, 2024.
ForecastEx will operate as a fully integrated DCM and DCO,
offering Futures Commission Merchants ("FCMs") and their customers
the ability to hedge against or express conviction on the outcome
of key economic and climate events using Forecast Contracts.
Forecast Contracts will initially include key U.S. economic
indicators such as unemployment rate, CPI and GDP as well as
climate indicators such as global temperature, U.S. temperature and
atmospheric carbon dioxide concentration. See website for complete
contract details.
Key attributes of Forecast Contracts include:
- Pairing – Forecast Contracts are associated
with specific real-world events, with the event question determined
by a "Yes" or "No" outcome. The contracts for a given question are
considered paired and, instead of being executed at a single price
agreed upon by two participants, are executed when the sum of the
"Yes" and "No" bids reach $1.01. The
participant holding the contract with the correct outcome at
resolution receives $1.00 and the
participant holding the contract with the incorrect outcome
receives $0. Contracts may be closed
prior to resolution and the resultant gain or loss realized through
buying the opposite position.
- Fully Collateralized – All bids submitted by
Members are fully collateralized with cash, which ensures that
ForecastEx has sufficient funds to settle contracts when resolved
or closed beforehand. This mitigates the credit risk participants
would otherwise face.
- Level Playing Field – The DCM operates as a level
playing field with no advantages or incentives offered to any
participant over another.
- Simple, Low Fee Structure – ForecastEx charges a
single $0.01 fee, built into the
$1.01 aggregate pair bid, which it
collects when the event has been resolved or contract netted
beforehand. ForecastEx does not charge any other fees.
- Incentive Coupons – ForecastEx distributes 100%
of the income it earns on the cash collateral it holds to its
Members in the form of incentive coupons. The coupon is accrued
daily based upon the market value of contracts the Member holds at
the close and is distributed to the Members monthly. ForecastEx
expects some Members to rebate a portion of this incentive coupon
to their customers.
FCMs interested in ForecastEx membership should contact
membership@forecastex.com
About ForecastEx:
ForecastEx is a wholly owned
subsidiary of Interactive Brokers Group, Inc (Nasdaq: IBKR), whose
other subsidiaries include Interactive Brokers LLC (IB LLC) and IB
Global Investments LLC (IBGI LLC). IB LLC, an FCM and broker, is a
ForecastEx Member approved to offer Forecast Contracts to its
customers as well as eligible customers of other non-U.S. broker
affiliates on whose behalf it provides execution and clearing
services. IBGI LLC, an Affiliated Customer of IB LLC, will operate
as a liquidity provider, maintaining Bids on both the "Yes" and the
"No" of various Event Markets. Pursuant to ForecastEx Rule 405(b),
IBGI LLC bids are always filled last by ForecastEx if equal in
price to another customer's bid.
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SOURCE ForecastEx LLC