Comparing E-minis and ETFs

E-minis Trade More, Better for Short-term Techniques

While E-mini stock index futures and exchange-traded funds have both grown rapidly in the past 15 years, E-mini trading dwarfs that in EFTs while offering several other advantages, according to a study written by CME Group Managing Director John Labuszewski.

On average, nearly $142 billion is transacted each day in in CME Group's E-mini S&P 500 contracts, compared to about $18.5 billion in SPDR Trust and $536 million in iShares S&P 500, two popular ETFs.

E-minis and ETFs are both "quite attractive and actively traded by a wide variety of institutional, professional and individual market participants," Labuszewski wrote in a recent report. "Still, E-mini futures based on the most significant stock indexes tend to trade quite a bit more heavily than their ETF counterparts."

Additionally, E-minis are generally better suited for short-term trading techniques and have lower margin requirements, allowing for the potential to leverage capital to a greater extent. There is also, in some cases, the prospect of more favorable tax treatment than with ETF trading.

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