CME Group on Monday said it plans to introduce a new line of smaller stock index futures contracts later this month, aiming to make futures trading more affordable for both individual and institutional investors.
The company said its new E-nano equity index futures are scheduled to launch Aug. 24, pending regulatory approval. The contracts will be one-tenth the size of its existing Micro E-mini futures, allowing investors to trade the market with smaller amounts of money.
“As equity markets continue to reach all-time highs, the barrier to entry has increased for retail investors, creating a need for even smaller contracts that deliver cost efficiency and enhanced flexibility,” said Tim McCourt, global head of equities, foreign exchange, and alternative products at CME Group.
“E-nano equity index futures will enable our clients to hedge their portfolios with an unprecedented level of granularity, all within the trusted infrastructure and centralized liquidity that is available from CME Group,” he added.
The new contracts will track four major U.S. stock market indexes: the S&P 500, Nasdaq-100, Russell 2000, and Dow Jones Industrial Average. Like other CME futures products, they will be available for trading nearly 23 hours a day.
The Aug. 3 announcement comes as U.S. stock indexes continue to trade near record highs, increasing the cost of investing in traditional futures contracts.
Martin Franchi, CEO of NinjaTrader Group, said the smaller contracts could make futures trading more accessible.
“U.S. equity markets have been on a historic run, and that’s great news for investors; however, they’re operating without the benefits that futures uniquely provide, such as capital efficiency, margin offsets and nearly 23-hour access to trade macro events as they unfold,” Franchi said. “Nano-sized equity futures through CME Group change that calculus. We see this as another significant expansion of access to U.S. equity futures, and NinjaTrader is proud to bring it to our community.”
Robinhood also welcomed the new products, saying that the launch of nano-sized equity index futures later this summer is another key milestone in its mission to democratize access.
“As major U.S. equity benchmarks climb to historic highs, some retail traders are being priced out of existing futures products,” said JB Mackenzie, vice president and general manager of futures and prediction markets at Robinhood. “We’re excited to work with CME Group to make it even easier for customers to trade these benchmarks with contracts that are one tenth the size of what’s available today.”
CME Group said demand for smaller-sized equity index futures has continued to grow since it introduced Micro E-mini futures in 2019. The company said about 4.5 billion Micro E-mini contracts have been traded since their launch.
The exchange also reported recent record trading activity for its Micro E-mini products, including an average daily volume of 3.2 million Micro E-mini Nasdaq-100 futures contracts in June and a record quarterly average daily volume of 1.5 million Micro E-mini S&P 500 futures contracts during the first quarter.
The new E-nano equity index futures will be listed on CME and the Chicago Board of Trade and will be subject to the exchanges’ rules.