CME Relaunches Single-Stock Futures in U.S.

CME Group has relaunched cash-settled single-stock futures in the United States, listing contracts tied to more than 50 large companies, including Nvidia and SpaceX. The contracts will trade five days a week with roughly 23 hours of access each day and are cash-settled rather than physically deliverable.

Two contract sizes will be available: a standard contract that represents 100 shares and a micro contract that represents 10 shares. The exchange will offer 22 micro contracts to serve smaller-size positions in major names, including members of the so-called Magnificent Seven as well as Micron Technology, Pfizer and Walmart. More than 35 retail intermediaries are expected to distribute the products.

Regulators in the U.S. have approved the launch. The contracts received clearances from both the Securities and Exchange Commission and the Commodity Futures Trading Commission. Regulators have reduced minimum capital requirements for trading single-stock futures since the contracts were allowed to return in 2002. CME’s chief executive, Terry Duffy, acknowledged the exchange’s earlier effort to establish a U.S. single-stock futures market had not taken hold and noted market conditions have changed since the prior launch.

The exchange is marketing the contracts to both retail traders and institutional investors. Futures give traders a way to take leveraged long or short exposure to individual stocks without owning the underlying shares. Hedge funds and asset managers can use the contracts to manage single-stock exposure, obtain short positions when shares are hard or costly to borrow, and hedge concentrated holdings. Futures do not require the same option-specific pricing inputs known as the Greeks, which the exchange says may make them simpler for some traders.

Single-stock futures are already part of equity markets in other regions. In India, traders use them for leveraged directional bets, portfolio hedging and arbitrage between cash and futures prices. European institutions use them to manage balance-sheet positions, handle dividend-related risks and smooth capital reporting around regulatory dates.

Extended trading hours allow positions to be adjusted around company news and earnings released outside the regular equity session. Market participants caution that liquidity can be thinner in off hours, which may lead to sharper price moves and greater volatility compared with highly liquid cash markets.

The relaunch comes amid growing competition for derivatives flows from other exchanges and offshore venues. The new single-stock futures provide another instrument for traders to express views on individual companies and manage exposures without taking ownership of shares.