What Small Exchange deals？

Founded in 2019, Small Exchange primarily trades financial futures contracts for U.S. Treasury yields with maturities ranging from 2 to 30 years.。

However, the contracts traded by Small Exchange are small.。For example, the nominal value of the two-year Treasury yield contract is only $3,800, well below the full-size contract worth $200,000 in nominal terms traded on the Chicago Mercantile Exchange.。

Small Exchange previously offered contracts for precious metals, technology stocks, hemp, crude oil and U.S. dollars, but those contracts have now been withdrawn。

Small Exchange is a so-called "Designated Contract Market" registered with the U.S. Commodity Futures Trading Commission (CFTC).。

The exchange lists 13 futures brokers on which it can execute business, including some names familiar to UK traders such as Interactive Brokers, Gain Capital, Tickmill and ED & F Man Capital markets.。

Like most derivatives markets, Small Exchange is an online trading venue with an exchange platform that supports market, limit, stop and limit order types, trading from 7: 00 a.m. to 4: 00 p.m. Chicago time.。Each contract has two delivery months at the same time and can be traded on spreads.。

Why IG Repurchases Small Exchange？

Trading in OTC CFDs is effectively banned in the United States, and IG's buyback of Small Exchange is an attempt to expand the range of products and services it offers to U.S. retail investors and traders.。

IG Group and its US subsidiary want to take advantage of Small Exchange's trading technology, which has been hailed as a world-class trading platform, risk monitoring system and matching engine.。

Tom Sosnoff, founder of Tastylive (now part of iG), said of the deal: "We are pleased to have the opportunity to re-acquire Small Exchange, the future of the US market structure depends heavily on product innovation at the exchange level, and we will be able to build a large-scale, market-leading exchange within the next decade."。

Does IG's deal to buy Small Exchange make sense?？

Small Exchange is a world-class platform or not, and it's hard to get the world boiling over in terms of trading volume or open contracts。

According to the exchange's own data, on its busiest day last month, only 59 contracts were traded on its April two-year Treasury contract.。As of press time, the contract has only 255 open positions。This is due in part to CME's launch of its own small contracts, such as the Micro E-mini S & P, which is a scaled-down version of the E-mini S & P and a scaled-down version of the S & P futures contract.。

During this period, U.S. short-term Treasury yields experienced unprecedented volatility。

IG Group presumably saw value in Small Exchange, and given its low volume, despite not disclosing financial terms, we might be able to conclude that they were acquired at a bargain price。