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After Five Years, Micro Equity Futures Still Gaining Steam

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Ivan Castano, for CME Group

At a Glance:

  • Micro E-mini equity futures have surpassed more than 2.6 billion cumulative contracts traded in the five years since their launch
  • The growth in retail trading has complemented the rise in these smaller-sized contracts, which offer greater access and more precise risk management

The COVID-19 pandemic saw a rise in retail traders entering the markets during a period of unprecedented uncertainty.

As this new era gripped global markets, this growing pool of market participants sought novel tools to more quickly and efficiently navigate risks such as those tied to inflation, interest rates, economic reports and geopolitical events.

Enter Micro E-mini futures, a series of bite-sized contracts CME Group launched five years ago to broaden traders’ access to the U.S. stock market’s top equity indexes, chiefly the S&P 500, Nasdaq-100, Russell 2000 and the Dow Jones Industrial Average. Since then, the portfolio has expanded to include S&P MidCap 400 and SmallCap 600 futures to provide further hedging opportunities across the U.S. small and midcap stock universe.

At one-tenth the size of its regular E-mini futures contract, the micros offer retail traders an opportunity to execute trades with smaller sums and lower margin requirements. They also expire five times a week as well as at the end of the month and quarterly, giving traders more opportunities to capture market-moving events.

While the pandemic era surge in retail trading fueled some of the popularity of these contracts, their launch in 2019 had already resulted in wide-scale adoption and one of the most successful product launches in the 175-year history of CME Group.

“When the influx of retail traders entered the market during the pandemic, Micro futures contracts were well-positioned to help these participants navigate a quickly changing economic landscape,” said Paul Woolman, CME Group Global Head of Equity Products. “They offered liquidity and greater access – all at lower cost – to sophisticated, active traders.”

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Right Timing

CME Group introduced Micro E-mini equity index futures to make its derivative contracts more accessible to a larger pool of traders.

Apart from refining their index exposure, these 10:1 contracts also offer great versatility as they can be easily swapped into an E-mini futures position. That provides greater flexibility to manage positions as market conditions change as well as additional liquidity. All of these benefits became increasingly useful for traders as a period of prolonged uncertainty continued.

“Ongoing uncertainty in the equity markets is making more granular risk management a priority for many traders,” said Woolman. “Micro E-mini futures allow market participants to more precisely manage their index exposure or hedge existing equity portfolio positions.”

More than 2 Billion Contracts Traded

As traders have benefited from these smaller-sized contracts, which complement CME Group’s suite of E-mini equity futures launched in 1997, their growth has been impressive.

Since roll out on May 6, 2019, Micro E-mini futures have surpassed more than 2.6 billion contracts traded – with the E-mini S&P 500 and Nasdaq-100 contracts both amassing over 1 billion contracts respectively, according to Woolman.

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Source: CME Group. Data as of April 30, 2024.

Refining Strategies

As the momentum continues, this year’s Micro E-mini average daily volumes (ADV) have exceeded 2.4 million contracts. Meanwhile, international participation has been strong with 24% of volume now occurring outside of U.S. trading hours.

By offering access to the U.S.'s primary equity indexes, traders can use the smaller-sized contracts to fine-tune their index exposure and meet their goals. That was the intention five years ago. As world events created unforeseen risks, the more accessible contracts have also become a reflection of the growing risk management focus necessary in today’s equity markets.

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