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AN ELECTRONIC
COMMODITY FUTURES EXCHANGE
FACT SHEET
FutureCom announces an application to the
Commodity Futures Trading Commission for approval of the first electronic trading exchange
for agricultural commodities available over the Internet. In the application, FutureCom
seeks approval for a contract market and trading in live cattle and options – the
first designated contract on the Exchange. FutureCom developer, W.H. O’Brien, said
other designated contracts will be added in response to the needs of the marketplace.
FutureCom is a limited partnership and an
affiliate of the Texas Beef Group, several commonly owned grain and cattle companies with
headquarters in Amarillo, Texas. FutureCom is the outgrowth of several years of
development work in trading, and managed agricultural databases over the internet.
"Commodities have been trading the
same way for a hundred years and FutureCom believes there are new and improved tools that
will provide traders with a better vehicle for completing transactions. We will combine
lower transaction costs with enhanced transparency. Traders will know where they are every
second.", said Mr. O’Brien. FutureCom will provide a cash settled contract that
will relieve concerns of traders for delivery expense and uncertainties. To see the
differences between FUTURECOM's new trading system and the traditional system, click here. The new Exchange and contract will:
- LOWER TRANSACTION
COST. FutureCom will provide the trader with substantially lower transaction
costs and in some cases will be as low as 25% of traditional fees and commissions. This is
a direct result of the savings from reduced overhead associated with matching orders
electronically rather than relying on people, paperwork, and bricks and mortar.
- ASSURE TRADING
INTEGRITY.
Costly errors resulting from human miscommunications and mistakes
will be eliminated as traders enter and confirm their own trades. Trading rules or
computerized order matching instructions established by the exchange will assure that all
orders are handled in the order received, recorded to the nanosecond, and matched
according to price and time without regard to the identity of the customer. Trading
irregularities and price manipulation will be difficult with electronic trading on
FutureCom.
- IMPROVE
LIQUIDITY. FutureCom, by broadening access to the Exchange over the internet,
will encourage all producers and processors of agricultural commodities to utilize a low
cost risk transfer vehicle for pricing their commodities. Commodity fund managers and
individual speculators will be able to deal more effectively and efficiently in open
markets. The agricultural products that are traded will be designed to closely mirror the
actual products as they trade in the cash markets. FutureCom will offer the first cash
settled live cattle contract.
- ENHANCE
TRANSPARENCY. FutureCom will offer traders their complete informational needs
in order to create an effective marketplace.
- Free quotes, graphs, and other current
trading information will be provided all qualified traders.
- The "Best 5" bids to buy and
offers to sell will be displayed in a specific contract month.
- Order fills will be available immediately
on market orders and within seconds by encrypted E mail on limit orders.
- Account balances and commodity positions
updated to the last tick of the Exchange will be easily accessible.
- Cash market information including the
index of the five primary fed cattle markets that will be used for cash settlement, will
be provided to traders. Traders will also be able to associate certain physical
commodities with the futures transactions. For example the sale of five live cattle
contracts could be assigned to a group of cattle in a feedyard.
- Trading histories of contracts on the
exchange will be available as will a traders account history.
- IMPROVE AND
SIMPLIFY INFORMATION SYSTEMS. Specially designed E mail forms will communicate
all exchange information. These communications will be sent using encrypted messaging with
returned receipt confirmations. FutureCom’s Mail Server will embrace Internet mail
standards and support all of the key Internet protocols. An electronic bulletin board will
allow customers to view any announcements of interest to members or traders on the
Exchange. A Trader Forum will provide a user group where traders can post messages
expressing opinions about the Exchange and the markets. The tasks to be managed by E mail
will include order fills, maintenance margin calls, closed out position reports with
profit or loss, statements and other relevant information.
- PROVIDE AN AUDIT
TRAIL. Traders and regulators will be provided with instant digital records of
each trade or a range of trades. Clearing transactions will be compiled digitally and back
up records of all transactions retained by the exchange and made available to the CFTC on
short notice. Each session initiated by a trader will be available for review.
FutureCom will be located in Amarillo,
Texas in the heart of the nation’s breadbasket. An experienced technical staff will
oversee the administration of the clustered servers that will handle and match the orders
placed on the Exchange. FutureCom will use a strict price/time priority order matching
algorithm based upon instructions set forth in simple order processing forms submitted to
the Exchange by traders.
Access to FutureCom will be provided to
any Member or qualified trader. A trader will need only a PC, modem, and internet access.
Traders will connect to secure servers requiring user ID and passwords. Orders will be
entered by traders using simple forms on web browsers that will set the order
specifications and confirm the order before execution. Margins required for a trade must
be on deposit with the Exchange prior to the execution of a trade.
Members will sign account and clearing
house agreements with the Exchange and compliance will be monitored as trading occurs. Any
account failing to maintain the necessary margin requirements will be liquidated after
proper notice and time to cure.
FutureCom’s electronic exchange and
designated contract offers the trader an opportunity to benefit from an improved trading
product delivered at a greatly reduced transaction cost. Parties interested in obtaining
more information on FutureCom may contact:
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