Competition and Innovation in U.S. Futures Markets

Abstract

This article employs data on current volume and contracts approved by the Commodity Futures Trading Commission to document the history of approvals, launches, and successes of all contracts in U.S. futures and futures options markets. Approximately 59 percent of futures contracts and 73 percent of options that have been launched, no longer trade. Futures contracts on financial instruments have been the most successful futures, while options on financial futures have been the least successful options. For exchanges with at least 20 launches, the most successful in launching futures has been the New York Cotton Exchange, while the most successful in launching options has been the New York Mercantile Exchange. The article examines 13 cases in which competing products were launched nearly simultaneously and finds no clear-cut winner in head-to-head competition. In the majority of cases, both contracts failed.

TOPICS: Commodities, futures and forward contracts, exchanges/markets/clearinghouses, performance measurement