“The Commodity Futures Trading Commission today announced that it has issued an Order of Designation to Small Exchange, Inc., located in Chicago, Ill., granting it status as a designated contract market (DCM), effective today. Small Exchange is incorporated under Delaware state law.
“The CFTC issued the order under Section 5 of the Commodity Exchange Act (CEA) and CFTC regulation 38.3(a). After review of its application and associated exhibits, the CFTC determined that Small Exchange demonstrated its ability to comply with the requirements of the CEA and the CFTC’s regulations applicable to DCMs.”
The Small Exchange, Inc. (SEI) offers a basket of five products and hopes simplicity will be a niche for the exchange.
“The Small Exchange is making futures markets more accessible to more people. Futures are more capital-efficient than stocks, but their complex design and large size have kept modern traders from adopting them for speculative and risk management needs. The Smalls offer the best of both worlds with products that are small, standard, and simple,” SEI says on its website.
SEI’s five products are: SMGO \ Small Global Oil, SFX \ Small US Dollar, SM75 \ Small Stocks 75, S10Y \ Small 10YR US Treasury Yield, and SPRE \ Small Precious Metals.
SEI offers unique indexes of popular trading vehicles like the dollar and oil.
In the case of SFX, in their promotional video, SEI asks rhetorically, “wouldn’t it be nice to trade the US dollar without conversions?”
SEI continues in the video, “our solution is SFX, an index that puts the US dollar against the most common currencies, so you can trade it more directly.”
Regarding their SMGO product, their promotional video states, “The Small Global Oil Index reduces exposure to geographical influence and blends multiple benchmarks to represent a greater world of crude.”
SEI also states that each of their products have less volatility and they require less margin than their competitors.
“When you trade crude ETFs, you have to set aside 50-100% of the product’s value, SMGO needs less from your capital, at only 5-10%, and Small Global Oil typical moves just ten percent of the actual dollar amount of other oil futures,” TSE says in their promotional video for SMGO.
All prices move in .01 increments and the contracts expire on the third Friday of every month.
“To trade the Small Exchange products,” the company says on its website, “individual traders will need to have a relationship with a Clearing Member either directly or through an intermediary, such as an Introducing Broker.
“Organizations wanting to connect to the Exchange can do so through direct market access or an independent software vendor (ISV). All direct access Participants are required to certify with the Exchange. Additional information on connectivity can be found on the Info Hub. ISVs, Market Data Providers and Extranets providing services to the Exchange will be announced soon!”
As a CFTC approved exchange, SEI is required to also be a self-regulatory organization and their rulebook is here.
Trading occurs at SEI Monday through Friday from 7AM Central Time to 4PM Central Time.
SEI celebrated the news on its Twitter account by pronouncing, “Yesterday we received our CFTC designation as a contract market. Visit our website at http://smallexchange.com and stay connected to our social channels for more information.”