ECONOMY

Futures bourse looks ahead

Greece’s futures and options exchange (ADEX) hopes to boost business with its stock futures products, soon to be launched, and increase liquidity in both the cash and derivatives markets, officials said yesterday. We expect the launch of futures on individual stocks to excite retail interest. Intraday traders and players with a shorter time horizon wishing to put limited capital to use should also find the contracts attractive, ADEX business development director Nick Porfiris told Reuters in an interview. ADEX plans to launch its first futures contracts on four individual stocks by early November, starting with blue chips OTE Telecom and National Bank. The London International Financial Futures Exchange (LIFFE) is also launching universal stock futures on OTE and National Bank on October 31. Other ADEX stock futures in the first wave in November will probably include Alpha Bank, Commercial Bank, Panafon and Intracom, all meeting high cash-market liquidity requirements. For intraday traders, stock futures will be less costly in terms of commissions compared to the cash market, Porfiris said. Arbitrage will also bring added liquidity to the market. ADEX stock futures will allow for delivery of the underlying security at expiration and will not be cash settled. Quoted in euros, each contract will have 100 shares as its trading unit. The margin required to trade them will be 25 percent and a lower 4 percent in the case of spreads. Delivery of the underlying security is an advantage, enabling portfolio reshuffling when contracts are kept until expiration, Porfiris said, adding that more strategies like relative trades or spreads between a stock and an index will soon be possible. For example, a long OTE, short National position will end up with OTE in the portfolio and a sale for National Bank. Traders may avoid the cash market’s 0.3-percent tax on sell trades as well. Stock futures in vogue Porfiris said futures on individual stocks were first launched in 1990 by Australia’s SFE exchange and Sweden’s OM. Trading volumes picked up by 1997 and today Spain’s MEFF has overtaken London’s LIFFE. He said 11 derivatives exchanges currently trade stock futures including Finland’s HEX, Euronext, Portugal’s Bolsa de Derivados Do Porto, Hungary’s Budapest exchange, South Africa’s SAFEX, Hong Kong’s HKEX and Montreal’s exchange. And other large markets like Singapore’s SIMEX and Chicago’s CME plan similar stock futures launches. Based on end-July statistics, MEFF, LIFFE and SAFEX lead in terms of stock futures turnover. Spain’s MEFF has traded 2.97 billion euros followed by LIFFE with 1.31 billion. ADEX, which so far only trades bond and stock index futures and options, has targeted 75 members by the end of the year from 63 currently. Futures trading accounts have been growing steadily and numbered 6,487 in July, when it traded a total of 509,872 contracts.