IKON Group - NASDAQ NFX Platform

NASDAQ OMX Futures ExchangeSM (NFXSM) XAU/USD Spot Gold Futures™ are cash-settled contracts that simulate the over-the-counter (OTC) Spot Gold market trading experience, with the protection of a regulated exchange. Contracts trade under the symbol NAU.

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Background

In cooperation with NASDAQ OMX Futures Exchange, IKON USA created a vision that sought to replicate the spot Gold market via a cash-settled spot gold futures contract. IKON created the Spot Gold Futures contract in response to Dodd Frank Act (DFA) legislation, which forced the cessation of all leveraged retail spot gold transactions. Following the construct of DFA, exchange traded Spot Gold futures provide central counterparty clearing and the protection of the Options Clearing Corporation.

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XAU/USD Spot Gold Futures Key Features

IKON - NASDAQ Futures Exchange

 

  • Simulates the OTC spot gold market
  • Exchange listed
  • Provide transparent central clearing through the Options Clearing Corporation (OCC)
  • Available 24 hour via Exchange of Futures for Physicals (EFPs)
  • Cash-settled
  • Swap Point feature with daily cost to carry calculation

 

 

Why XAU/USD Spot Gold Futures™?

In cooperation with NASDAQ OMX Futures Exchange, IKON USA, Inc. (“IKON”) created a vision that sought to replicate the spot Gold market via a cash-settled spot gold futures contract. IKON created the Spot Gold Futures contract in response to Dodd Frank Act (DFA) legislation, which forced the cessation of all leveraged retail spot gold transactions.

 

What are Spot Gold Futures?

XAU/USD Spot Gold Futures™ is a cash-settled spot gold futures contract for which the final settlement price is based on the final settlement price for gold futures listed on the Commodity Exchange, Inc. (”COMEX”). In addition to the daily mark to market of all open positions to the day’s settlement price, a cash interest adjustment will be calculated separately for each position to account for the ”swap point” by The Options Clearing Corporation (“OCC”). The swap point calculation will be based on data calculated by IKON USA, Inc. This product seeks to simulate the Over-The-Counter (”OTC”) spot market for gold by replicating the cost of carry element present in all OTC gold transactions, which is also calculated separately from the price of gold. XAU/USD Spot Gold Futures™ are quoted in terms of U.S. dollars per Troy ounce out to two decimal places.

 

What are IKON Swap Points?

IKON “Swap Points” were designed to, as closely as possible, capture the daily interest payment received (e.g. interest or cost of carry) on the OTC position in gold. The Swap Points are adjusted daily for long and short holders of exchange-listed XAU/USD Spot Gold Futures™ contracts.

The Swap Points are calculated by IKON and they are expressed in terms of fractional parts of minimum price increments as positive or negative numbers. A positive Swap Point reflects a credit for the short futures position and a debit for the long futures position. A negative swap point reflects a debit for the short futures position and a credit for the long futures position. IKON obtains the rate used to calculate the Swap Points by separately polling a minimum of four independent resources, which may include banks, market makers, and liquidity providers that are not necessarily members of NFX, no later than 5:30 E.T. each business day. The rate consists of a two-sided bid and offer which are aggregated to calculate the market rate. The interest rate is utilized in determining the Swap Point credits/debits for each open position. The Swap Point represents cents per ounce as a positive or negative amount. OCC will make a cash adjustment (debit or credit) to each open position.

 

How are Swap Points valuated?

Normal market convention is that each contract has a value date of Trade Date plus two days (“T+2”). If the position is not closed the same day, the open position is “rolled” to the next value date. As a result of this “roll”, there is an interest rate cost of carry known as the “Gold Swap Rate”, which is reflected by “Swap Points”.

 

What will be the ticker symbol for XAU/USD Spot Gold Futures?

The base ticker symbol for XAU/USD Spot Gold futures will be “NAU”.

 

What will be the contract size for XAU/USD Spot Gold Futures?

One contract will be equal to 10 Troy ounces.

 

What will be the minimum price interval/dollar value per tick for XAU/USD Spot Gold Futures?

The minimum price interval/dollar per tick will be $.10 per troy ounce.

 

What are trading hours for XAU/USD Spot Gold Futures?

The trading hours will be are 8:00 A.M. to 5:00 P.M. E.T. Twenty-four hour trading will be available via Exchange of Futures for Physicals (EFPs).

 

When will be the last trading day for XAU/USD Spot Gold Futures?

The last trading day will be three (3) U.S. business days prior to the last day of the contract month.

 

How will the XAU/USD Spot Gold Futures settle?

XAU/USD Spot Gold Futures will be cash settled in U.S. Dollars. Settlement of the XAU/USD Spot Gold Futures will result in the delivery of a cash settlement on the Final Settlement Date. The cash settlement amount on the Final Settlement Date shall be the final mark-to-market amount of the e Final Settlement Price multiplied by ten (10). The Final Settlement Price will be based on the final settlement price for gold futures listed COMEX.

 

What will be the Final Settlement Date for XAU/USD Spot Gold Futures?

The Final Settlement Date will be the first OCC business day following the last day of trading.

 

Who will clear XAU/USD Spot Gold Futures?

OCC will clear the XAU/USD Spot Gold Futures.