What are 'E-Micro Forex Futures'

E-Micro Forex Futures are a type of currency futures contracts that are traded on CME Globex, a worldwide electronic trading system specializing in futures and their options.

E-Micro Forex Futures are unique in that they're one-tenth the size of standard forex futures.

BREAKING DOWN 'E-Micro Forex Futures'

E-Micro Forex Futures are a type of currency futures: exchange-traded contracts with currency exchange rates as the underlying commodity. There are both standard and e-micro contracts, each designed to suit a variety of traders' needs, accounts and risk tolerances.

E-micro Forex Futures contracts are offered exclusively by the CME Group and traded on CME Globex, an electronic futures trading platform. Unlike traditional forex, the currency futures market is regulated as a futures market and has centralized pricing and clearing.

There are several available E-micro Forex Futures contracts: euro/U.S. dollar; U.S. dollar/Japanese yen; British pound/U.S. dollar; U.S. dollar/Canadian dollar; Australian dollar/U.S. dollar US dollar/Swiss franc.

CME Group touts E-micro Forex Futures, a one-tenth the size of its usual forex futures, as "the perfect size" for forex investors who are interested in trading in a "regulated and secure forex market" but want to have a much more limited exposure to risk.

E-micro Forex Futures offer liquidity, security and transparency, according to CME Group.

"With more than $100 billion in daily liquidity, CME Forex is the largest regulated Forex marketplace in the world," it explains. The CME Forex product suite consists of 49 futures and 31 options contracts based on 20 currencies."

In addition, CME Group offers security via "centralized clearing, guaranteed counterparty credit and segregation of customer funds."

And its transparency and anonymity mean that forex traders, whether they are individuals or large institutions, have "complete and equal access to the book of prices and trading opportunities."

Benefits of E-micro Forex Futures

In 2009, Larry Schneider, director of business development the Chicago-based independent introducing brokerage firm Zaner Group, offered five reasons why the micro-currency trading enabled by E-micro Forex Futures would be good for some investors:

  • First, he noted the value of working within a regulated market.
  • Fully-transparent markets that offer investors a level playing field. 
  • Customer protection through segregated customer funds and counterparty credit risk.
  • All trades are executed on the CME Group's Globex electronic platform, which offers usability and dependability.
  • Micro currency futures are all cash-settled. Investors do not take on the risk or possibility of having to make or take physical delivery.
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