Hedge Fund Role In Futures Speaks Volumes

Two of the largest futures exchanges in the country know a good thing when they see it, which is why both the Chicago Mercantile Exchange and Chicago Board of Trade are ramping up efforts to attract hedge funds. Already, hedge funds have been "a major contributor to volumes," Peter Thomas of R.J. O’Brienand Associates told Dow Jones Newswires, noting that both exchanges have grown about 25% so far this year. There is no actual figure of how much HFs represent the total trading volumes of the exchanges, but Thomas says the size of those of the trades give some indication of their presence. According to DJN, gold futures trading is up 1000% from a year ago, thanks largely to increased HF trading, and the CME reportedly has benefited from all that energy-related activity by the funds.

CME and CBOT are doing their best to make sure the money just keeps on coming, and so the former has established a team dedicated to building the stable of hedge fund customers through membership, while the latter offers incentives aimed at enticing more hedge fund trades. "Hedge funds are a very important customer group to the CBOT and the liquidity they provide plays a major role in the marketplace," an exchange spokesman told DJN. "We value hedge funds as a customer and we will continue to actively market the exchange’s services to them."