FairX announces new futures exchange for retail traders as trading heats up

Karthik Subramanian

Fairx, a CFTC regulated exchange, has announced that it will be launching a new futures exchange in June with a focus on the retail trading segment.

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The idea is to create a futures exchange that will be smaller and simpler for active retail traders who may feel left out or swamped at the major futures exchanges that are dominated by the big players.

Many financial services firms have agreed to offer FairX products at launch and that includes TD Ameritrade, E*Trade Financial, ABN AMRO Clearing Chicago LLC, and others. These partnerships are very important for generating the initial momentum that is needed for any exchange.

FairX CEO Neal Brady said: “We’re delighted to work with many of the industry’s leading firms to offer a futures trading venue designed to meet the needs of the global retail futures trader. FairX aims to democratize access to futures and options on futures by delivering superior products, seamless access, and dramatically lower exchange costs to the active retail trading community.”

The exchange will start with a list of products that includes futures on the Bloomberg US Large Cap Index, an index that tracks the largest 500 companies by market cap, the Bloomberg US Dollar Spot Index, which tracks the value of the U.S. dollar against a basket of international currencies, as well as the SuperTech Index, tracking 15 of the largest and most actively traded companies engaged in technology, media, and manufacturing industries.

The exchange would be CFTC regulated where it is registered as a Designated Contract Market (DCM). The company had already closed a few rounds of investment led by Hyde Park Venture Partners and it would be looking to use these funds to build a strong and reliable exchange.

“As investors in FairX and strategic contributors to the platform, we believe the FairX offering will provide attractive product and execution alternatives to our global clients,” said J.B. Mackenzie, Managing Director at TD Ameritrade Futures & Forex, LLC. “We look forward to working with the FairX team to expand the retail futures landscape.”

“As a leading U.S. clearinghouse across an expanding range of asset classes, we’re excited to work with FairX to serve the needs of the global retail trading community by providing reliable, virtually around-the-clock clearing and settlement services,” said Paul Cusenza, Chairman & CEO of Nodal Clear.

Retail traders are generally considered as cannon fodder for institutions and larger traders at the big exchanges and it is interesting that FairX proposes to be an exchange for such a class of traders. It remains to be seen whether they would continue to be favorable to retail traders when the volumes start picking up and they start feeling the demands of the larger industry.

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