CME Group is bringing back single-stock futures in the US, giving investors a new way to take leveraged long or short positions in major companies without directly trading their shares, according to a report by Bloomberg.
The exchange is launching contracts linked to more than 50 large US companies, including Nvidia and SpaceX, in a bid to tap growing retail participation and institutional demand for additional tools to hedge equity exposure.
The cash-settled futures will trade nearly around the clock, five days a week, providing 23-hour access compared with the traditional 9:30 a.m. to 4 p.m. US equity trading session.
CME is offering two contract sizes. The larger contracts will represent 100 shares, while 22 micro futures will be based on 10 shares. The smaller contracts include members of the so-called Magnificent Seven technology stocks, as well as companies including Micron Technology, Pfizer and Walmart.
For hedge funds and other institutional investors, the contracts could offer another way to manage individual-stock exposure, hedge portfolios and gain short exposure where shares are difficult or expensive to source.
The launch also comes as the availability of stock in high-profile listings has become a more prominent issue. Investors unable to secure allocations in popular initial public offerings could potentially use futures to gain exposure to a company without owning the underlying shares.
CME is targeting both retail traders and professional investors, with more than 35 retail intermediaries expected to distribute the contracts. The exchange believes the relatively straightforward structure of futures could appeal to traders who find equity options difficult to navigate.
Unlike options, futures do not require traders to assess variables commonly known as the “Greeks”, which influence the pricing and sensitivity of options contracts.
The launch marks a second attempt by CME to establish a US market for single-stock futures. The contracts were prohibited for almost two decades before regulatory changes allowed them to return in 2002, but the market failed to generate sufficient demand and had largely disappeared by 2020.
CME Chairman and Chief Executive Terry Duffy acknowledged the earlier failure during the exchange’s latest earnings call, saying the market environment had changed significantly since the original launch.
Regulators have since reduced the minimum capital requirements for trading single-stock futures, while CME has secured approvals from both the Securities and Exchange Commission and the Commodity Futures Trading Commission for the new contracts.
Single-stock futures have already become an important part of equity markets in other regions. In India, they are widely used to establish leveraged directional exposure, hedge portfolios and pursue arbitrage strategies. Arbitrage funds, for example, can buy shares while selling futures to capture price differences between the two markets.
European financial institutions also use the contracts to improve balance-sheet efficiency, particularly around regulatory reporting dates, and to manage equity exposure and dividend-related risks.
The renewed US launch comes as CME faces increasing competition across the derivatives landscape. The conflict in Iran has boosted activity in rival Intercontinental Exchange’s Brent crude complex, while offshore derivatives platforms and prediction markets are also attracting trading volumes.
The new futures will also extend the hours during which traders can respond to company-specific events. That could be particularly relevant around earnings announcements, although extended trading also creates additional risks, including potentially sharp price moves when liquidity is thinner.
