This article showcases the growth we have seen in SQFs since their launch in summer 2025 while detailing the financing component embedded in the product, how it works and ultimately how it impacts PnL for a trader.

Spot-Quoted futures are designed to allow retail traders to access key benchmark futures products at the spot level with low upfront capital commitment due to the small notional of the contract and the capital efficiencies available, as the exchange does not require the position to be fully funded. Activity has ramped up considerably over the past four months, culminating in a quarter-to-date record ADV of 120K in Q4 2025. 

The key benefits of Spot-Quoted futures are:

1. The contract’s low notional value making it more accessible
2. Trading in and out at the spot price, providing the trader with transparency
3. The longer maturity reducing the need to roll monthly or quarterly 

As a futures instrument with capital efficiencies, there is a financing component element to its design. This is called the financing adjustment. This financing adjustment is realised at the end of the trading day and is only incurred for positions held overnight.

While this is different from the normal futures contract design (where the cleared price is known at the time of execution), the total financing adjustment component of the futures construction has a minimal impact on a trader’s PnL (profit or loss).

For a full breakdown of Spot-Quoted futures and its mechanics, please read our Intro to Spot-Quoted futures.

It is important to note that for intra-day traders, or positions which are closed within the same trade date, the financing component will not impact the PnL and is irrelevant.

This minimal impact of the financing adjustment to a trader’s PnL if the position is held overnight can be shown in a few ways:

• Daily financing adjustment as a percentage of notional in basis points (bps)
• Daily financing adjustment as a percentage of the change of the underlying close over close (close today [T] vs. close yesterday [T-1])
• Daily financing adjustment as a percentage of the high/low for day (high minus low range on trade date) as a percentage

It is important to consider the magnitude of the financing in relation to the notional being traded in the product.

Below is a table depicting the average daily financing adjustment number and the dollar ($) amount associated with it (on a per contract basis) due to the contract multiplier.

Another way to digest the impact of the financing adjustment is to consider its value against the percentage change in an index between the close on previous day (T-1) versus today (T). This shows the movement in the index level over the course of a single trading day.

The daily financing number as a percentage of the total move close over close represents < 2% on average across all six Spot-Quoted futures products at CME Group.

This means that in terms of the total index move across ~24 hrs, 98% of the PnL move is driven by the underlying asset price change, and 2% is derived from the fact it is not a fully funded position and financing is required. A trader should primarily focus on the underlying asset price change versus the financing given the financing has a minimal impact on the daily PnL move.

Similar to the above metric, comparing the financing adjustment to the high-low range for a given trading day allows traders to understand the added impact financing has on a trader’s PnL. The takeaway here is even stronger than close-to-close, with daily financing accounting for ~1% of the daily move within an index.

The average daily financing cost, in dollars, is ~$0.45 (or 1bp) across the six listed Spot-Quoted futures contracts. This is a relatively small figure compared to the daily index move and the PnL available for traders who are able to directionally express their view correctly.

To conclude, Spot-Quoted futures provide an innovative way to enter the futures market via a smaller accessible notional size which is not fully funded, allows trading to occur at the spot price and with a reduced frequency of needing to roll one’s position. The fact the product is not fully funded means there is an end-of-day financing component incurred if the position is held overnight; however, the magnitude of this financing amount is typically very small in the context of a) the daily PnL move and b) the cost compared to the notional exposure of the position.

The financing adjustment is minimal in nature at just 0.01% to 0.04% a day of the notional position taken (depending on the specific product), and thus, the focus for a trader looking to adopt the product should be on the characteristics this product provides.