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2021 has been the year of the retail trader. According to Bank of America, more money has been invested in the U.S. stock market in the last six months than in the previous 12 years combined.

A huge part of this has been attributed to the retail trader. CME Group, long known for offering liquid futures products geared toward institutional use, has begun offering reduced size micro products to meet the needs of sophisticated active traders. In a recent discussion, CME’s Director of Client Development for Retail Craig Bewick commented, “we’ve seen individuals around the globe who have decided to take a little more control of their financial destiny” and “the overwhelming success of micros in equity indexes has led to an awareness of micros in general.” 

Recently CME Group has launched the Micro Bitcoin contract to complement the success of the standard Bitcoin contract. Bewick acknowledged that the standard contract, at five bitcoin, “is a large contract even for institutional traders especially when you consider that it trades at 80-120% volatility.” The Micro Bitcoin futures contract is sized at one-fiftieth of the standard contract and has been enthusiastically received by active traders. It traded more than one million contracts in its first two months.

Bob Iaccino, chief market strategist of Path Trading Partners, says Micro contracts provide more precision for those already involved in trading equities, bitcoin or other markets where micros are now available. “The smaller contracts mean less capital requirement and more access for individuals,” he says. “Micros allow you to take advantage on a more detailed level and give you the flexibility to scale in and out of positions with greater precision.” 

CME Group is now following up with upcoming launches of Micros in WTI crude oil, treasury yields and FX. At present, “futures still remain a relatively small part of the global retail trading space,” according to Bewick, but the trend seems clear. It’s easy to see why the Micro contracts have seen explosive growth over the last year. Active traders want control, precision and near around the clock liquidity. Micros help to fill the voids that previously existed.

Watch Jim Iuorio, Bob Iaccino and Craig Bewick discuss the trend toward Micro futures in the video above.


 

 

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

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