SSFs are an alternative way to invest and trade equity products. At expiration the SSF turns into a long or short stock position. Accordingly if you are interested in buying any of the Stocks whose symbol is displayed above you will notice that you can purchase a SSF that is currently offered BELOW the offer on the stock. That is, you can buy the SSF cheaper now and at expiration you will get the stock at a discount to the present underlying purchase price. All prices above were last updated at 15:50:01 EST on 2009-07-02, and will have fresh updates throughout the trading day. HOVER over the symbol to see the range of the implied annualized discount for 2009-07-02. (more…)

If you are interested in selling any of the Stocks whose symbol is displayed above you will notice that you can sell a SSF that is currently bid ABOVE the bid on the stock. That is, you can sell the SSF for a premium now and at expiration you will get the short stock at a premium to the present underlying offer price. All prices above were last updated at 15:50:01 EST on 2009-07-02, and will have fresh updates throughout the trading day. HOVER over the symbol to see the range of the implied annualized premium for 2009-07-02. (more…)

About OneChicago:
OneChicago is an all-electronic exchange for trading Single Stock Futures (SSFs). Founded in 2002, we provide liquidity, anonymity, and market price transparency for equity alternative products. Contracts are cleared through the AAA-rated Options Clearing Corporation and regulated by both the SEC and CFTC. We also offer, BETS, the only off-exchange electronic matching system for Block and EFPS transactions. Click to View OneChicago Fact Sheet

Single Stock Futures- An Alternative to Securities Lending:
Securities lending is a process that involves both market and counterparty risk. Securities lending is similar to an EFP transaction utilizing single stock futures (SSF) with some very stark differences that simplifies the procss, significantly enhances the total return, and removes counterparty risk from the process. Click to View PDF

Basis Point Discussion:
When an investor buys an asset, they expect the return to be commensurate to a certain level of risk. Too often the investor is disregarding the opportunity cost of receiving a risk-free rate of return as well. Single stock futures lower this opportunity cost by enabling an investor to finance an equity position more efficiently, thus improving the risk-reward ratio of their investment. Click to View Basis Point Discussion PDF

EFPs Using Single Stock Futures:
OneChicago has brought the financing of equity positions onto an exchange traded format through an Exchange for Physical (EFP) transaction. An EFP is the simultaneous selling of a stock and buying of a Single Stock Future (SSF) for a long equity position or buying of a stock and selling of a SSF for a short equity position. SSF have an interest rate built into their price that is determined by a true competitive marketplace. Like repos and reverse repos in the debt markets, EFPs provide a cheap and efficient financing vehicle. Click to View PDF

How futures can simplify securities lending/borrowing:
Single stock futures provide significant cost advantages and flexibility for both the lenders and borrowers of stock by enabling them to exchange positions without many of the restrictions and intermediaries that exist with existing programs. As a result, the lenders and borrowers are able to reduce revenue sharing agreements, fees, counterparty risk, and the risk of the recall of positions. Click to View PDF

Calculate the savings with Single-Stock Futures:
When looking to raise capital, single stock futures provide efficiency, transparency, and anonymity to the financing process. In the bond world, investors have the repo market. In the equity world, investors have the securities futures market. By utilizing the securities futures market, investors have the ability to utilize their equity positions as collateral for short-term loans at rates that are competitively determined by the marketplace.
Calculate the Savings with Single Stock Futures

As world financial markets progress, expand and link into a global marketplace and as counterparty credit risk multiplies and becomes more complex, OCC’s guarantee function continues to protect clearing members and their customers. OCC is the first clearinghouse worldwide to have received a ‘AAA’ credit rating from Standard & Poor’s (S&P) because of its ability to fulfill obligations as the counterparty for exchange-traded derivatives.
OCC stands behind every cleared trade that has been executed on the markets and exchanges it serves, in addition to stock loan transactions executed through the Stock Loan program. OCC assures performance to selling (lending) and purchasing (borrowing) clearing members, eliminating counterparty risk. OCC in effect becomes the buyer (borrower) to every clearing member representing a seller (lender) and the seller (lender) to every clearing member representing a buyer (borrower). The substitution of OCC as counterparty is achieved through a legally binding novation process that has withstood the test of time. This process supports fungibility for the contracts OCC clears and facilitates a liquid secondary market.
View OCC Financial Guarantee PDF

The structure of the single stock futures (SSF) market makes it as ideally suited for borrowing and lending money at the AAA credit rating of the Options Clearing Corporation as European-exercise index options on the S&P 500 (SPX). The reason is simple: Just as trades in European-exercise options cannot be exercised until the expiration date, neither can trades in SSFs.

In addition, as long as short positions in SSFs deliver into long and short positions, respectively, in the underlying stock or exchange-traded fund, there is no basis risk. The future will be priced at the stock plus the interest rate cost of carry minus the future value of the expected dividend. As expiration approaches, the future’s price converges to the stock’s price and then delivers into the stock itself.

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The following is an abridged version of a column that appeared on RealMoney.com on July 22, 2008.

The entire sturm und drang about naked short selling last week might have been interesting had it not been so unnecessary. Single stock futures (SSFs) can and have been used to do the exact same trade since November 2002. Advocates on both sides of the debate are arguing about the best way to escape a room whose door is and has been open.
Using Single Stock Futures
Let’s distinguish between short-selling and naked short-selling. The former involves locating a stock, borrowing the shares and selling them; the latter skips the location of the stock and borrowing same. As option market makers in particular have emphasized in recent days, their ability to engage in naked short-selling until such time as shares can be located and borrowed is vital to their ability to function in today’s electronic markets. Both market makers and normal short-sellers have a vital role to play in markets. (more…)

The tutorial covers such topics as:
The SSF Financing Benefit.
SSFs are considered a cost efficient method to invest in stocks. This is because SSFs have the cost of carry interest rate built into their price. This interest rate is locked when the trade is made and is determined in the SSF pricing by multiple participants in a competitive open market. By contrast, when purchasing stock on margin the variable interest rate is dictated by that single broker in a non-competitive environment which is subject to market interest rate volatility.
Click the Image to View the Tutorial!

In an effort to provide education about our products and their benefits, OneChicago provides ongoing webinars and other education events.

Below is a list of upcoming events.

OneChicago Blocks & EFP Trading System
The OneChicago B.E.T.S. (Blocks and EFP Trading System) is intended to streamline the current reporting of Bi-lateral (i.e. pre-negotiated trades between you and your customer or other market participant) Block and EFP trades and additionally create an “on screen” (point and click) trading platform for Block & Block-Roll orders as well as a matching system for EFPs. The system will auto-match orders in strict price-time priority. Block-Rolls and EFPs will be displayed and traded on a differential basis. There are two types of user interfaces available. An internet based Graphical User Interface (GUI) and an Application Programming Interface (API). Users may connect via the internet, VPN, or point-to-point connection.

Single-stock futures are securities that share some of the features of Equities and also some of traditional commodity . There are interest rate benefits that can not be found with other products.
where F is the single-stock futures contract price, P is the underlying stock price, r is the annualized interest rate, and Div is the expected dividend.

Another valuation of single stock futures can be found through the following:

where S is the price of the underlying (the stock price), PV(Div) is the Present value of any dividends entitled to the holder of the underlying between T and t, r is the risk free rate, and e is the base of the natural log. F is of course the price of the single stock futures contract.