News Release

CBOT Successfully Launches Binary Options on Target Fed Funds Rate

Wed Jul 12 2006

For Immediate Release

Media Contact:                                                                 
Craig Grabiner                                      
(312) 341-5758


CHICAGO, IL, July 12, 2006 – The Chicago Board of Trade (CBOT®) today announced the successful launch of its Binary options on the Target Federal Funds Rate.  The new contract, developed at the request of CBOT market participants who desired target rate exposure, further diversifies the CBOT’s product offering at the short end of the yield curve. 

The Target Federal Funds Rate is set by the United States Federal Reserve Bank, typically at its scheduled Federal Open Market Committee (FOMC) meetings.

CBOT Senior Vice President of Business Development Robert D. Ray said, “The CBOT’s new Binary options on the Target Federal Funds Rate were designed to provide new trading opportunities for participants such as dealer short-term funding desks, index arbitragers and hedge funds that seek to manage short-term interest rate exposure.”

Building on the growth of electronically-traded Financial options at the CBOT, Binary options on the Target Federal Funds Rate contracts will trade exclusively on the Exchange’s premier electronic trading platform.  In June 2006, a record 2,066,032 Financial options were traded electronically at the CBOT – more than 93,000 contracts per day and more than three times greater than June 2005.  Last month, nearly 20 percent of Financial options trades at the CBOT were executed electronically.

At expiration, binary options have two possible outcomes, and final contract settlement is either a fixed dollar amount or nothing at all.  When the options expire, “in the money” options pay $1,000 to option holders, while those that are “at the money” or “out of the money” pay zero.  Strike prices for the new CBOT Binary options correspond to the Target Federal Funds rate using a formula of 100-minus the actual Target rate.  For example, a Target Federal Funds Rate of 5.25 percent would be reflected as 94.75.  Expiring options are cash-settled and based upon the most recent Target Federal Funds Rate level established by the FOMC.  The options will expire on the last day of a regularly-scheduled FOMC meeting.

Binary options on the Target Federal Funds Rate trade from 6:00 p.m. to 4:00 p.m. CT Sunday through Friday.  Trading in expiring options ends at 2:00 CT on the final trading day.  The Exchange has contracted with two firms to provide two sided markets for the new contract during daytime hours. 

For more information, visit Binary Options.

About the CBOT

As one of the leading global derivative exchanges, the Chicago Board of Trade provides a diverse mix of financial, equity and commodity futures and options-on-futures products.  Building on its 158-year history, the CBOT continues to advance into the future using the strength of deep liquidity, market integrity and member-trader expertise.  Using superior trading technology in both electronic and open-auction trading platforms, the CBOT provides premier customer service to risk managers and investors worldwide.  For more information, visit our website at

Forward Looking Statements

In this release, our use of the words “may,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or other comparable terminology is intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in filings made by CBOT Holdings, Inc. with the Securities and Exchange Commission, which can be obtained at its website at  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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