U.S. Futures Exchange

U.S. Futures Exchange, commonly known as USFE, was a Chicago-based electronic futures exchange focused on introducing new products to the established U.S. derivatives market. It developed from Eurex US, an American exchange operation associated with Eurex and Deutsche Börse, which had acquired BrokerTec. After obtaining its own futures-exchange license from the U.S. Commodity Futures Trading Commission, the business was rebranded as U.S. Futures Exchange in October 2006 after Man Group acquired a majority share. The exchange positioned itself as an innovation-oriented alternative within a derivatives industry dominated by long-established institutions. Rather than concentrating solely on conventional futures tied to major commodities or broad financial benchmarks, USFE pursued contracts linked to corporate events, equity indexes, foreign exchange, renewable energy, and internationally recognized market indexes. Its product strategy included binary event futures, index futures, spot-equivalent foreign-exchange futures, and a planned range of specialized environmental and thematic contracts. USFE launched its first contracts under the new brand in April 2007. These were binary event futures linked to the possible acquisition of the Chicago Board of Trade by either the Chicago Mercantile Exchange or Intercontinental Exchange. The CME-related contract ultimately settled at 100 after the Chicago Mercantile Exchange and Chicago Board of Trade completed their merger in July 2007. The exchange also announced plans for futures based on ISE indexes and Morningstar capitalization and style indexes, as well as renewable-energy futures based on the NORDIX Financial Wind Index. In foreign exchange, USFE announced a proposed 23-hour trading service for spot-equivalent futures in major currency pairs including the euro, British pound, Japanese yen, Australian dollar, Swiss franc, and Canadian dollar. The structure was intended to combine pricing characteristics resembling the spot foreign-exchange market with the transparency and regulation of an exchange-traded futures venue. In September 2008, USFE announced an exclusive licensing agreement with Deutsche Börse to introduce a U.S.-dollar-denominated mini DAX futures contract. The planned contract used a $10 multiplier and was designed to provide U.S. traders with access to the German DAX index without direct currency exposure. The exchange operated as a fully electronic venue. Its final trading platform, USFE 1.0, was based on Deutsche Börse Systems' Eurex 8.0 technology and incorporated an additional market-allocation algorithm intended to encourage liquidity providers. Connectivity was supplied through the Eurex network backbone, giving the exchange access to a broader international electronic trading infrastructure. USFE's operating life was short. On December 17, 2008, MF Global announced that the exchange was either being offered for sale or would be closed. USFE subsequently terminated all exchange operations on December 31, 2008. The closure ended an attempt to build a differentiated electronic futures venue around novel contracts during a period of rapid consolidation and structural change in global derivatives markets.

U.S. Futures Exchange emerged from the American exchange business formerly known as Eurex US. That operation was connected to the Eurex and Deutsche Börse ecosystem and had acquired BrokerTec before obtaining its own futures-exchange license from the U.S. Commodity Futures Trading Commission. In October 2006, Man Group acquired a majority interest in Eurex US and changed the exchange's name to U.S. Futures Exchange. The rebranded exchange sought to distinguish itself through product innovation. Its strategy was to use electronic trading and a broad technology network to introduce contracts beyond the traditional futures categories associated with the century-old derivatives industry. USFE's first post-rebranding products were announced and launched in 2007. They included binary event futures tied to the competing proposed acquisitions of the Chicago Board of Trade by the Chicago Mercantile Exchange and Intercontinental Exchange. The CME-related contract settled at 100 when the CME and CBOT merger was completed on July 13, 2007. USFE also pursued a portfolio of index products. It announced proposed contracts based on ISE indexes, including homebuilding, gold, natural-gas, water, and SINdex measures. An exclusive arrangement with Morningstar covered futures based on 16 capitalization- and style-based indexes. The exchange further announced renewable-energy futures based on the NORDIX Financial Wind Index, with products planned for seven U.S. regions. Another major initiative was a proposed market for spot-equivalent foreign-exchange futures. Announced in September 2007, the service was intended to trade for 23 hours per day and to replicate important pricing characteristics of spot foreign exchange while retaining the transparency and regulatory framework of an exchange-traded futures market. Initial currency pairs included EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, and USD/CAD. In September 2008, USFE announced an exclusive licensing agreement with Deutsche Börse for a mini-sized U.S.-dollar-denominated DAX futures contract. The proposed contract was scheduled for launch on October 1, 2008, and used a $10 multiplier. Its design aimed to give U.S. futures participants access to a major German equity index without requiring them to manage direct currency exposure. The exchange's infrastructure was fully electronic. Its final platform, USFE 1.0, was based on Eurex 8.0 technology developed by Deutsche Börse Systems. USFE added a market-allocation algorithm intended to reward or attract liquidity providers, while the Eurex network backbone supplied connectivity to traders in multiple locations. The venture did not remain independent for long. On December 17, 2008, MF Global announced that USFE was for sale or would be closed by December 31. No sale is identified in the available reference material, and USFE terminated all exchange operations on December 31, 2008. The exchange therefore remains a defunct example of an electronic futures venue that attempted to compete through specialized and event-driven contracts during a period of significant consolidation in the derivatives industry.

• 2008

  Mini DAX futures licensing agreement announced

  [1]U.S. Futures Exchangeen.wikipedia.org

  USFE announced a Deutsche Börse licensing agreement for a mini U.S.-dollar-denominated DAX futures contract.

• 2008

  Exchange operations terminated

  [1]U.S. Futures Exchangeen.wikipedia.org

  USFE ceased all exchange operations on December 31, 2008.

• 2007

  First contracts launched under the USFE brand

  [1]U.S. Futures Exchangeen.wikipedia.org

  USFE introduced binary event futures linked to competing bids for the Chicago Board of Trade.

• 2007

  CME-CBOT event future settles

  [1]U.S. Futures Exchangeen.wikipedia.org

  The binary event future on a CME acquisition of CBOT settled at 100 after the merger was completed.

• 2007

  Foreign-exchange futures initiative announced

  [1]U.S. Futures Exchangeen.wikipedia.org

  USFE announced plans for 23-hour spot-equivalent futures trading in six major currency pairs.

• 2006

  Eurex US is rebranded as U.S. Futures Exchange

  [1]U.S. Futures Exchangeen.wikipedia.org

  After Man Group acquired a majority share, the former Eurex US operation adopted the U.S. Futures Exchange name.

A fully electronic, innovation-led futures exchange seeking to broaden exchange-traded derivatives through event, index, foreign-exchange, and renewable-energy contracts.

• Event futures · 2007

  Binary Event Futures

  USFE's first contracts after its rebranding were binary event futures tied to the proposed acquisition of the Chicago Board of Trade. A contract settled at 100 if the specified event occurred and at 0 if it did not. One contract addressed the proposed CME acquisition and another addressed a possible Intercontinental Exchange acquisition. The CME-related contract settled at 100 after the CME-CBOT merger was completed in July 2007.

• Foreign-exchange futures · 2007

  Spot-Equivalent Foreign-Exchange Futures

  USFE announced a planned 23-hour electronic market for futures designed to track spot foreign-exchange pricing through nightly basis payments. The announced initial currency pairs were EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, and USD/CAD. The product concept sought to combine spot-like economics with the transparency and regulatory characteristics of an exchange-traded futures contract.

• Equity-index futures · 2008

  Mini U.S.-Dollar-Denominated DAX Futures

  USFE announced an exclusive licensing agreement with Deutsche Börse for a mini-sized DAX futures contract denominated in U.S. dollars. The planned $10 multiplier was intended to make the German equity index more accessible to U.S. futures traders while avoiding direct currency exposure. The contract was announced for launch on October 1, 2008.

• Index futures · 2007

  ISE Index Futures

  USFE announced plans for futures based on several ISE indexes, including measures associated with homebuilders, gold, the SINdex, natural gas, and water. The proposed products formed part of the exchange's effort to expand into specialized and thematic index derivatives. The available reference material indicates that the contracts were planned for release in the fourth quarter of 2007.

• Index futures · 2007

  Morningstar Index Futures

  USFE announced an exclusive arrangement with Morningstar to list futures based on 16 Morningstar capitalization- and style-based indexes. These proposed contracts were intended to give traders exchange-listed exposure to differentiated equity-market classifications rather than only broad market benchmarks.

• Renewable-energy futures · 2007

  NORDIX Financial Wind Index Futures

  USFE announced a planned series of renewable-energy futures beginning with contracts based on the NORDIX Financial Wind Index. The proposed series covered seven distinct U.S. regions and reflected the exchange's attempt to develop new derivatives categories connected to energy transition and environmental markets.

• 2008

  License and plan mini DAX futuresProduct launch

  Background

  USFE wanted to provide U.S. participants with a smaller, dollar-denominated way to access a major German equity index.

  Action taken

  USFE entered an exclusive licensing agreement with Deutsche Börse and announced a mini DAX futures contract with a $10 multiplier.

  Aftermath

  The product was scheduled for October 1, 2008, shortly before the exchange was put up for sale or closure.

  Source

• 2008

  Close the exchangeStrategy

  Background

  MF Global announced on December 17, 2008, that USFE was for sale or would be closed by the end of the month.

  Action taken

  USFE terminated all exchange operations on December 31, 2008.

  Aftermath

  The U.S. Futures Exchange brand ceased operating as an exchange.

  Source

• 2007

  Launch binary event futuresProduct launch

  Background

  USFE was seeking differentiated products that could extend futures trading beyond traditional asset categories.

  Action taken

  The exchange launched binary futures on the possible acquisition of the Chicago Board of Trade by the Chicago Mercantile Exchange or Intercontinental Exchange.

  Aftermath

  The CME-related contract settled at 100 when the CME-CBOT merger was completed on July 13, 2007.

  Source

• 2007

  Develop specialized index and renewable-energy contractsStrategy

  Background

  USFE aimed to build a broader product range around thematic indexes, investment styles, and emerging energy markets.

  Action taken

  The exchange announced proposed ISE index futures, Morningstar index futures, and NORDIX wind-index futures.

  Aftermath

  The available reference material does not confirm the launch of all announced contracts, and the exchange closed the following year.

  Source

• 2007

  Plan spot-equivalent foreign-exchange futuresProduct launch

  Background

  The exchange sought to offer exchange-traded foreign-exchange instruments with pricing behavior closer to the spot market.

  Action taken

  USFE announced a 23-hour trading service for spot-equivalent futures in six major currency pairs.

  Aftermath

  The reference material does not establish the full commercial outcome of the planned service.

  Source

• 2006

  Rebrand the exchange as U.S. Futures ExchangeStrategy

  Background

  Following Man Group's acquisition of a majority share in the former Eurex US operation, the business sought to establish a distinct identity and pursue product innovation in the U.S. futures market.

  Action taken

  The exchange adopted the U.S. Futures Exchange name and developed a strategy centered on new electronic futures products.

  Aftermath

  The rebranded venue introduced event, index, foreign-exchange, and renewable-energy product initiatives before ending operations in 2008.

  Source

1. 1U.S. Futures Exchangeen.wikipedia.org