CME Opens Up Access to Globex2

Backed by approval from the Commodity Futures Trading Commission (CFTC), the Chicago Mercantile Exchange has, for the first time, opened up direct access to its Globex2 electronic trading system to a full range of futures and options market participants--including retail investors. Provided that a clearing member of the exchange guarantees them, all market participants now have the ability to enter orders for electronically traded CME contracts directly into Globex2. What's more, those same participants will also have the ability to see the full depth of the bids and offers for a contract traded over Globex2.

Prior to these CFTC-approved CME rule changes, which took effect Nov. 27, the Merc's electronic access landscape was quite different. Direct access to Globex2 was restricted to members, clearing members and market participants equipped with Electronic Trading Hours (ETH) permits. In addition, that triumvirate was the only set of participants that had the power to view all of the bids and offers for electronically traded contracts.

The likes of a retail investor, in the past, could only tap into the best bid and offer displayed on a Globex2 screen--with the aid of the their member broker. But, in accordance with the new rules, that investor will be able to view all of the bids and offers, and enter an order into his very own Globex2 terminal, if he so chooses.

"Many of the users of Globex2 have told us that they want direct access to the platform, and we're basically responding to what users have told us," explains CME chairman Scott Gordon. "We realize that we're not the only choice that customers have in terms of where they do their business. There are competing marketplaces and competing exchanges out there, and we want to give people a reason to continue to use our products".

On top of providing unrestricted access to Globex2 for member-firm-backed customers of the Merc, the exchange is also eliminating restrictions on the number of Globex2 terminals members themselves can run. Without providing specifics, Gordon says that each individual member of the CME was only allowed to operate a "limited number" of Globex2 workstations. But now they can employ as many as they want.

The demand for more open access to Globex2 has been driven, in large part, by the growth of the CME's electronic e-mini stock index contracts--which include the e-mini S&P and the e-mini Nasdaq. Stoked by the success of those contracts, the Merc's electronic trading volume has grown at a rate of "more than 100% per annum" over the last year-and-a-half, says Gordon. Moreover, thanks to the e-minis, the CME has attracted two brand new customer segments--retail investors and global investors who want to trade retail-sized products.

Year-to-date, Globex2 has traded an average of 132,550 contracts per day.