CME Reports Big Volume Changes
CME Group, the large futures exchange, says trading by members went down 21% from the third to the fourth quarter. It attributes the drop to extreme volatility in key contracts and normal seasonal slowdown as well as the credit crisis. Large hedge funds, one of the customer segments CME reported on, reduced trading volume by 32% and now account for 8% to 9% of the overall volume. But certain markets saw rapid growth in 2008, in particular E-minis, energy and metals products. Electronic trading continued to gain market share.
Man Group Offers AHL Notes
On January 26th Man Group Plc, the London-listed hedge fund firm, started to offer globally bonds linked to its futures trading program, AHL. The product, Man AHL Diversified Strategies Ltd, is available in US dollar and euro guaranteed bonds and as non-guaranteed income bonds. The guaranteed bonds come with a capital guarantee from Credit Suisse and target a higher capital return, while the income bonds pay a fixed annual coupon. The underlying AHL quantitative trading program returned 33.2% in 2008 and more than 20% annualized since its inception in 1996. Christoph Möller, Man Investments Global Head of Distribution, says Man AHL Diversified Strategies has the potential to achieve a low or even negative correlation to stocks and bonds and therefore reduce the volatility of a portfolio, whilst bringing an additional source of return.
Aussie Weather Contracts Start Trading Feb. 23
This month CME is expanding its temperature contracts to include the Australian cities of Melbourne, Sydney and Brisbane. CME director of alternative investment products, Felix Carabello, says they're working with a broad group of customers, including energy companies, retailers and municipalities, to develop weather derivatives. “Like our other temperature-based products, these Australian contracts enable industries that face business uncertainty as a result of unusually hot or cold temperatures to transfer their risk exposure to the capital markets," he said. The new listings, including Heating Degree Day and Cooling Degree Day contracts on both monthly and seasonal futures and options, are priced in Australian dollars. CME now offers temperature products for 45 cities and other derivatives on hurricanes, snowfall and frost.
IAM Starts CTA Fund of Funds
From FINalternatives: International Asset Management, a fund of hedge funds firm, has launched the IAM Trading Fund with more than US$100 million in capital. The fund will invest in a portfolio of commodity trading advisers, starting with 10 to 15 CTAs. FINalternatives quotes Morten Spenner, chief executive of IAM, saying that the strategy has ample capacity.
Dubai Contracts Go Electronic
The Dubai Mercantile Exchange Ltd., an energy futures and commodities exchange, completed the migration of its contracts to the CME Globex electronic trading platform where they became accessible for trading as of early February. This means the world's three crude oil benchmarks - WTI, Brent and Oman - will trade on the same platform. CME Group, through its acquisition of NYMEX, holds a 26% equity stake in DME. Other shareholders are a Dubai holding company called Tatweer, the Oman Investment Fund and a group of financial and energy companies including Goldman Sachs, Morgan Stanley, JP Morgan, Vitol, Shell, Concord and Casa Energy.