CME Group's New Contracts To Manage Price Relationships

CME Group Inc. (NASDAQ:CME) recently unveiled the first-ever, exchange-traded precious metals spread and ratio futures contracts. The market participants will now be able to better manage precious metals price relationships using these contracts.

The three newly launched contracts include Gold/Silver Ratio futures, Gold/Platinum Spread futures and Platinum/Palladium Spread futures.

The market participants will still be able to access the deep liquidity offered by Commodity Exchange Inc. (COMEX) Gold and Silver, and New York Mercantile exchange (NYMEX) Platinum and Palladium futures. These contracts will start trading on Monday, Oct 24, 2016, subject to regulatory review.

These ratio and spread futures contracts will cater to consumer demand for new tools. The tools help in effective management of the price relationships of the company’s precious metals futures contracts, which are mostly utilized to manage portfolio risk.

Much of the complexity involving price ratio and spread trading of precious metals will be removed with the introduction of the aforementioned contracts. In addition, the contracts will provide the necessary tools to more market participants to offset macroeconomic risks.

The new contracts will be financially designated and developed on CME Group’s existing suite of precious benchmark precious metals products.

All three contracts will be available for electronic trading via CME Globex as well as submission for clearing through CME ClearPort, Dec 2016 onward.

CME Group has been driving its growth by strategically offering different types of futures contracts. Last month, the company launched two futures contracts, namely Alumina FOB Australia (S&P Global Platts) and Alumina FOB Australia (Metal Bulletin). It also expanded its base metals offering in the same period. These contracts were launched with the intention to help customers better manage risk amid volatility.

Zacks Rank and Stocks to Consider

Currently, CME Group carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader finance sector include National Interstate Corporation (NASDAQ:NATL) , NMI Holdings, Inc. (NASDAQ:NMIH) and MarketAxess Holdings Inc. (NASDAQ:MKTX) . While both National Interstate and NMI Holdings sport a Zacks Rank #1 (Strong Buy), MarketAxess Holdings holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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