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CME Announces Latest Expansion

CME Announces Latest Expansion of Equity Index Product Line with Futures on the Highly Successful ETFs - NASDAQ-100 Index Tracking Stock; S&P 500 Depositary Receipts; and iShares Russell 2000

CHICAGO, May 5, 2005 – CME, the largest U.S. futures exchange, today announced it will launch futures contracts on three of the largest and most actively traded Exchange Traded Funds (ETFs) in the U.S. New CME ETF futures contracts on NASDAQ-100® Index Tracking Stock (ticker: QQQQ), S&P 500® Depositary Receipts (ticker: SPY) and iShares Russell 2000® (ticker: IWM) are scheduled to begin trading on the exchange’s CME® Globex® electronic trading platform on June 6, 2005. The futures on the S&P 500 and NASDAQ-100 will trade exclusively at CME.

ETFs, which are baskets of securities designed to track an index, represent one of the fastest growing investment vehicles in today’s equity markets. Over the past 10 years, ETF assets under management have grown from approximately $1 billion to about $226 billion at the end of 2004. The S&P 500, NASDAQ-100 and Russell 2000 ETFs maintain a combined total of more than $82 billion in assets under management.

“With today’s announcement, we are bringing together two of the most successful financial product innovations in the last decade, the CME E-mini™ stock index futures and ETFs,” said CME Chairman Terry Duffy. “More than 92 percent of all U.S. equity index derivatives trading takes place at CME. With more than $82 billion in assets under management, the S&P 500, NASDAQ-100 and Russell 2000 ETFs are the largest, most well-known ETFs in the U.S. With the launch of these new ETF futures, we are continuing to build on our success in developing innovative new products to meet the needs of investors while providing more value for our shareholders.”

“Equity market participants want access to a broad array of products and markets, and the growth of our CME E-mini™ S&P 500, CME E-mini NASDAQ-100 and CME E-mini Russell 2000 contracts makes these ETF products a natural addition,” added Craig Donohue, CME Chief Executive Officer. “Our CME E-mini S&P 500, CME E-mini NASDAQ-100 and CME E-mini Russell 2000, which average more than 800,000, 340,000 and 110,000 contracts respectively per day, have demonstrated the strong demand for smaller-sized futures contracts. With the addition of our new ETF futures, which are even smaller, we believe we will be able to attract more new customers – particularly sophisticated retail equity investors -- to CME.”

While CME currently offers both a standard size and an “E-mini” size contract on all three indexes, the new ETF futures will have a significantly smaller notional value of one-fifth of the CME E-mini contract. The S&P 500 Depositary Receipts futures contract will have a notional value of approximately $11,600, the NASDAQ-100 futures contract will have a notional value of approximately $7,000 and iShares Russell 2000 futures will reflect a notional value of approximately $12,300. With the smaller size, these contracts are designed to appeal to sophisticated individual investors. Unlike CME’s other equity products, which are cash settled, ETF futures will be physically delivered.

“Since its inception in 1993, the S&P 500 Depositary Receipts (SPDR) has accumulated approximately $50 billion in assets, and is the most actively traded security in the world in terms of value traded,” says Robert Shakotko, Managing Director of Index Services at Standard & Poor’s. “The new CME ETF futures contracts on the SPDR should provide investors with another strong product to trade the overall direction of the market.”

“The launch of a futures contract on the NASDAQ-100 Index Tracking Stock (QQQ®) is a significant development that reinforces our relationship with the CME,” said John Jacobs, CEO of Nasdaq Global Funds, Inc. “QQQ is the most actively traded ETF in the world and this development gives investors another opportunity to own a product that is based on NASDAQ’s largest non-financial companies across major industry groups including computer and office equipment, computer software and services, telecommunications, retail and wholesale trade, and biotechnology.”

CME Futures contracts on the iShares Russell 2000 ETF should prove to be an important tool for professionals investors looking for a way to manage their exposure in the small-cap market segment,” said Kelly Haughton, Strategic Director of Russell indexes. “Overall, the Russell iShares family of ETFs, in particular the iShare Russell 2000 ETF, has been experiencing significant increases in the average daily dollar volume of trading, growth in assets and a surge in new cash flow from investors.”

One of the advantages of ETF futures, like all futures, is that they will allow investors to take a short position without borrowing shares from a broker, which is necessary to sell short securities or ETFs. Also, the initial margin with ETF futures will generally be lower than the Regulation T margins associated with the underlying ETF.

Following are the specifications for the contracts:

Contract Size
One-hundred (100) ETF shares of S&P 500 (SPY) or iShares Russell 2000 (IWM); or two-hundred (200) shares of NASDAQ-100 Tracking StockSM (QQQQ)

Contract Months
March Quarterly Cycle and serial months

Trading Hours
Traded on the CME® Globex® electronic trading platform from 8:30 am to 3:15 pm Mondays through Fridays (Chicago times)

Minimum Price Fluctuation
$0.01 or $1.00 per contract in context of SPYs and IWM; $2.00 per contract in context of QQQs

Trading Halts
Trading halts are coordinated with halts in the underlying ETFs

Position Limits
11,250 contracts for QQQs; 13,500 contracts for IWM; 22,500 contracts for SPYs net long or short during the last five (5) trading days of an expiring contract

Final Settlement Date
Third Friday of the contract month

Last Trading Day
Trades until the normal close of trading on the Final Settlement Date

Final Settlement
Final settlement is accomplished through delivery of the requisite number of ETF shares

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