Regulators granted OneChicago LLC Futures Exchange the authority this month to trade futures on individual stocks, a new and somewhat controversial product for U.S. investors that was authorized by Congress in late 2000.
OneChicago–which is co-owned by the Chicago Mercantile Exchange, the Chicago Board Options Exchange and the Chicago Board of Trade–is the third exchange given the designation to trade so-called single-stock futures, which enable investors to bet on a stock without putting up as much cash as currently required under stock margin rules.
Island Futures Exchange LLC and Nasdaq Liffe Markets already have designations to trade single-stock futures.
But so far none of the exchanges are trading the products. They are waiting for the Commodity Futures Trading Commission and Securities and Exchange Commission to finalize rules governing the trading of single-stock futures.
Regulators have said for months that the rules were near completion, and a CFTC spokesman said Friday that rule finalization is “imminent.”
Critics have said the products, which will be available to individual and institutional investors, could be risky for consumers who might not understand what they are buying.
Meanwhile, OneChicago announced this month that it has launched a Web site (www.onechicago.com) to educate traders, brokers, money managers and other professionals about single-stock futures and its offerings in particular. When trading begins–the exchange says “later this year”–OneChicago will list futures contracts on more than 80 stocks and 15 narrowly based stock indices. Trading at OneChicago will be entirely electronic.
Big banks lead record gains: Commercial banks reported earnings of $21.7 billion in the first quarter, surpassing the previous quarterly record of $19.8 billion a year ago. The industry’s return on assets, a common measure of profitability, rose to 1.33 percent, the third-highest performance ever.
The biggest gains occurred at large banks, where net interest income offset higher expenses for loan-loss provisions and lower market-sensitive revenues. About 64 percent of all banks reported higher earnings than a year ago, according to the Federal Deposit Insurance Corp.
The number of commercial banks on the FDIC’s “problem list” rose from 95 to 102 in the first quarter. The last time the list had more than 100 banks was in late 1995. In addition, six commercial banks failed during the quarter.
Bank magazine for Boomers: This summer a new magazine is being launched for a very specific group of consumers: community bank customers older than 50 and enrolled in upscale bank clubs. Called “Onward,” the publication wants to link consumers to advertisers in the travel, fitness, hospitality and other industries. “We’re offering advertisers guaranteed circulation and a direct line to active Baby Boomers with means,” said publisher Jacqueline Nasseff Hilgert. “Onward” is the first consumer publication from NFR Communications Inc., an independent custom publisher in Minneapolis.
Insurance fund dips: The Bank Insurance Fund, which is funded by banks and helps replenish customers’ insured deposits if a bank fails, dipped this month below the required 1.25 percent coverage ratio (of BIF dollars to total insured deposits).
FDIC Chairman Don Powell said the decline was due to a regulatory reporting change.