MIAX launches Corporate Tax Rate Futures on MGEX

Rick Steves

U.S. President Biden said he is open to a 25% corporate tax rate as part of an infrastructure bill compromise as he wants to see a corporate tax rate “between 25% and 28%”. The new futures product allows firms to hedge the uncertainty.

The Minneapolis Grain Exchange (MGEX) has opened Corporate Tax Rate Futures for trading on the MGEX earlier this week.

Corporate Tax Futures are based on the SIL U.S. Corporate Tax Rate Index (CTAX) developed by SIG Index Licensing, LLC. CTAX is published and distributed by Bloomberg each day at 9:00 a.m. ET.

The cash-settled futures contracts are listed on MGEX via the CME Globex platform and are cleared by MGEX, a wholly-owned subsidiary of MIAX’s parent company, Miami International Holdings.

Thomas P. Gallagher, MIAX Chairman and Chief Executive Officer, said: “Corporate Tax Rate Futures are a unique and innovative product that will play a major role in continuing our futures expansion efforts. This product provides corporations and investors a new tool to manage risk associated with potential changes in corporate tax rates.”

Mark G. Bagan, MGEX President and Chief Executive Officer of MGEX, commented: “Investors and corporations have limited opportunities to manage the economic impact of changes in tax rates. MGEX is proud to list and clear Corporate Tax Rate Futures that we believe will be invaluable to a variety of market participants including corporations, liquidity providers, hedge funds and equity investors.”

Added Bart Smith, Head of FICC, ETF and Portfolio Group at the Susquehanna International Group of Companies: “Futures on the U.S. Corporate Tax Rate Index address a vital need for a variety of investors, especially risk managers. We’re thrilled to have partnered with MIAX and MGEX to create this efficient new way to mitigate risk associated with corporate tax rate changes.”

Corporate Tax Rate Futures are traded exclusively on MGEX and offer the industry a new way to hedge market exposure by tracking the highest marginal tax rate imposed by the United States federal government on the taxable income of corporations.

In late 2020, MIAX entered the volatility futures space with the launch of so-called Spikes futures contracts which are tradeable on the CME’s Globex platform.

The Spikes futures are contracts over the levels of 30-day volatility in the SPDR S&P 500 ETF (ticker SPY) or “spider” as it’s colloquially known, which is among the most actively traded ETFs in the world.

The Spikes contracts, which trade under the ticker SPK, are designed to track the rise and fall in expected 30-day volatility in the ETF and they will be priced using variance methodology and options on SPY across a range of US exchanges.

MIAX believes that its high-speed platforms will allow for more efficient pricing of volatility futures and it will offer pricing updates every 100 milliseconds.

The new futures contracts will trade alongside options on the Spikes volatility index, which was created and calculated by T3 index.com, a firm which specialises in the creation of financial indices and in particular option and volatility-related indices.

The Spikes futures are available to trade 23 hours a day 5 days per week.

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