Currency Futures Are Shrinking

The CME Group has recently introduced micro size currency futures for some of its most popular currency futures markets. The CME Group already offered full size and small size currency futures, but with the availability of the micro size versions, the currency futures are shrinking even further.

The new micro size currency futures markets are as follows:

• M6E - Euro to US Dollar
• M6B - British Pound to US Dollar
• M6S - US Dollar to Swiss Franc
• M6A - Australian Dollar to US Dollar
• M6J - US Dollar to Japanese Yen
• M6C - US Dollar to Canadian Dollar

The micro size currency futures are very small, with tick values of less than $1 in some cases. An example of the contract specifications for the micro size currency futures are as follows, for the M6E (EUR to USD) and M6B (GBP to USD):

• Symbol: M6E
• Expiration Date: June 15th 2009 (the second business day before the third Wednesday of every third month)
• Exchange: GLOBEX
• Currency: USD
• Contract Value / Multiplier: $12,500
• Tick Size: 0.0001
• Tick Value: $1.25

• Symbol: M6B
• Expiration Date: June 15th 2009 (the second business day before the third Wednesday of every third month)
• Exchange: GLOBEX
• Currency: USD
• Contract Value / Multiplier: $6,250
• Tick Size: 0.0001
• Tick Value: $0.625

The margin requirements for the micro size currency futures are low (as would be expected for such a low tick value), and this will make the micro size currency futures attractive to traders without much trading capital. However, the commission for a complete trade on the micro size currency futures is approximately $4.80. With a tick value of only $0.625, approximately eight ticks of profit would be used just to pay the commission, or conversely, an additional eight ticks of loss would be incurred, and this could make the micro size currency futures untradeable.