Precious Metals Spread and Ratio Contracts Frequently Asked Questions

  • 22 Sep 2016
  • By CME Group
  • Topics: Metals

Why is CME Group launching Precious Metals spread and ratio contracts?

The Gold/Silver Ratio, Gold/Platinum Spread and Platinum/Palladium Spread have been widely referenced by the market participants in the precious metals industry and traded in the OTC marketplace. The new cash-settled ratio and spread futures are built on the existing liquid and successful Precious Metals futures that are physically-delivered, and offer you additional trading opportunities. With transparent and seamless access, the new ratio and spread contracts provide unprecedented efficiency to those who routinely manage risks using similar OTC products. 

What are the benefits of the new contracts?

  • A cash–settled contract
  • True intraday price and spread transparency across the futures curve
  • Security through centralized clearing, guaranteed counterparty credit and segregation of customer funds through CME Clearing
  • Easily accessible electronic execution
  • Daily mark-to-market of positions

What are the contract symbols?

  • Gold/Silver Ratio futures – GSR
  • Gold/Platinum Spread futures – GPS
  • Platinum/Palladium Spread futures - PPS

How is the ratio or spread referenced?

Floating price is used for all of the three new contracts. 

Gold/Silver Ratio

The floating price shall be determined on the last trading day of a contract month, and shall be calculated using the prices for Gold futures and Silver futures published by the Exchange. For a contract month, the reference month of the Gold futures price shall be same month or the next nearest month in the cycle February, April, June, August and December. For a contract month, the reference month of the Silver futures price shall be same month or the next nearest month in the cycle March, May, July, September and December. The Gold futures price will be determined by a volume weighted average price (VWAP) during the 12:24-12:25 p.m. Central Time (CT) period of the reference month. The Silver futures price will be the settlement price of the reference month.

Gold/Platinum Spread

The floating price shall be determined on the last trading day of a contract month, and shall be calculated using the prices for Gold futures and Platinum futures published by the Exchange. For a contract month, the reference month of the Gold futures price shall be same month or the next nearest month in the cycle February, April, June, August and December. For a contract month, the reference month of the Platinum futures price shall be same month or the next nearest month in the cycle January, April, July and October. The Gold futures price will be determined by a volume weighted average price (VWAP) during the 12:03-12:05 p.m. CT period of the reference month. The Platinum futures price will be the settlement price of the reference month.

The floating price shall be the Gold futures price minus the Platinum futures price, and shall be rounded to two decimal places.

Platinum/Palladium Spread

The floating price shall be determined on the last trading day of a contract month, and shall be calculated using the settlement prices for Platinum futures and Palladium futures published by the Exchange. For a contract month, the reference month of the Platinum futures price shall be same month or the next nearest month in the cycle January, April, July and October. For a contract month, the reference month of the Palladium futures price shall be same month or the next nearest month in the cycle March, June, September and December.

The floating price shall be the Platinum futures price minus the Palladium futures price, and shall be rounded to two decimal places.

What is the settlement procedure?

Gold/Silver Ratio Futures

The daily settlement price for the Gold/Silver Ratio futures contract will be determined each business day by a volume weighted average price (VWAP) of the Gold futures nearby active month price during the 12:24pm-12:25 p.m. CT period divided by the settlement price of the Silver futures nearby active month price. The final settlement price will be determined on the third last business day of the month preceding the contract month.

Gold/Platinum Spread Futures

The daily settlement price for the Gold/Platinum Spread futures contract will be determined each business day by a volume weighted average price (VWAP) of the Gold futures nearby active month price during the 12:03pm-12:05 p.m. CT period minus the settlement price of the Platinum futures nearby active month price. The final settlement price will be determined on the third last business day of the month preceding the contract month. 

Platinum/Palladium Spread Futures

The daily settlement price for the Platinum/Palladium Spread futures contract will be determined each business day by the settlement price of the Platinum futures nearby active month price minus the settlement price of the Palladium futures nearby active month price. The final settlement price will be determined on the third last business day of the month preceding the contract month. 

What are the listed contracts and termination dates?

Gold/Silver Ratio Futures

Contract Month

Gold/Silver Ratio

Termination Date

 

Gold

Silver

Third last business day in

February

Feb

Mar

Jan

March

Apr

Mar

Feb

April

Apr

May

Mar

May

June

May

Apr

June

June

July

May

July

Aug

July

Jun

August

Aug

Sep

Jul

September

Dec

Sep

Aug

December

Dec

Dec

Nov

Gold/Platinum Spread Futures

Contract Month

Gold/Platinum Spread

Termination Date

 

Gold

Platinum

Third last business day in

February

Feb

Apr

Jan

April

Apr

Apr

Mar

June

Jun

Jul

May

July

Aug

Jul

June

August

Aug

Oct

July

October

 Dec

Oct

Sep

December

Dec

Jan

Nov

December

Dec

Dec

Nov

Platinum/Palladium Spread Futures

Contract Month

Platinum/Palladium Spread

Termination Date

 

Platinum

Palladium

Third last business day in

March

Apr

Mar

Feb

April

Apr

June

Mar

June

July

June

May

July

July

Sep

June

September

Oct

Sep

Aug

October

Oct

Dec

Sep

December

Jan

Dec

Nov

January

Jan

Mar

Dec

Who can use the new contracts?

The new ratio and spread futures contracts are relevant for any customers who are involved in the precious metals market, particularly valuable for the participants who have ratio and spread trades in the OTC market.

Investors and liquidity providers will find the new contracts useful to capture arbitrage opportunities or to manage price exposure. Importantly, compared to our leading physically-delivered Precious Metals contracts (e.g. GC, SI), the new ratio and spread futures have lower margin requirements, which should appeal to retail investors.

How do I trade the ratio and spread futures?

The Precious Metals Ratio and Spread contracts will be available to trade on CME Globex and via CME Direct, CME Group’s free front-end trading platform.

CME Globex operates as a Central Limit Order Book (CLOB) that is accessible 23-hours–a-day. The new ratio and spread contracts will also be available for clearing on CME ClearPort for privately-negotiated trades like Block Trades.

What are CME Globex and CME Direct?

The CME Globex platform was the first, and remains among the fastest, global electronic trading systems for futures and options. Through its advanced functionality, high reliability and global connectivity, it is now the world’s premier electronic marketplace for derivatives.

Learn more about CME Globex.

Delivered securely across the Internet, CME Direct is a highly configurable trading front-end for CME Group markets. It offers a complete suite of solutions across the trading lifecycle.

Learn more about CME Direct.

What is CME ClearPort?

CME ClearPort is a comprehensive set of flexible clearing services for the over-the-counter (OTC) market. Launched in 2002 to provide centralized clearing services and mitigate risk in the energy marketplace, CME ClearPort today serves as a gateway for a diverse slate of asset class transactions submitted for clearing. With OTC clearing through CME ClearPort, you can continue to negotiate your own prices privately and conduct business off exchange – but you also gain the advantages of increased security, efficiency and confidence.

Learn more about CME ClearPort.

About CME Group

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.

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