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Launch of IBKR forecast exchange postponed due to administrative problems

Launch of IBKR forecast exchange postponed due to administrative problems

The long-awaited launch of ForecastEx, a forecast exchange focused on economic and climate events, has been postponed. Originally scheduled for July 8, 2024, the launch has now been delayed until late summer due to administrative issues, as Steve Sanders, executive vice president of marketing and product development at Interactive Brokers, told Traders Magazine.

ForecastEx, a subsidiary of Interactive Brokers Group, has already received the necessary approvals from the Commodity Futures Trading Commission (CFTC) to operate as a contract market and derivatives clearing organization. The platform will allow Interactive Brokers' clients in eligible countries to trade forecasted contracts based on the probabilities of various future economic and climate outcomes.

The contracts cover U.S. economic events such as unemployment claims, consumer price index, retail sales and federal funds, as well as global climate events including temperature and atmospheric CO2 levels. Clients will be able to trade these forecast contracts by selecting YES or NO for specific forecasts.

Thomas Peterffy, founder and chairman of Interactive Brokers, has been working on ForecastEx for nearly a decade. Despite previous priorities, serious efforts to develop the platform began in November 2021. Interactive Brokers is the first futures commission merchant (FCM) to join ForecastEx, with plans to add more FCMs.

Eligible individual and institutional clients of Interactive Brokers LLC, Interactive Brokers Hong Kong Limited and Interactive Brokers Singapore Pte. Ltd. can trade these contracts through IBKR's ForecastTrader platform. Sanders expressed confidence in the sophistication and interest of retail investors in such instruments.

Contracts on key economic indicators, including the U.S. federal funds target rate, U.S. consumer sentiment index and U.S. real GDP, as well as climate indicators such as global and U.S. temperatures, will be available with varying durations - weekly, monthly, quarterly and annually.

Interactive Brokers is offering an incentive to pay interest at 0.5% below the current federal funds rate on the market value of positions at the time of closing, with interest accrued daily and paid monthly at the current rate of 4.83% APR.

In support of the launch, Interactive Brokers created a comprehensive set of educational materials on the IBKR campus covering U.S. economic indicators and significant economic events for the market.

After its initial launch, ForecastEx plans to go international and address additional local and global issues, with contracts limited only by the availability of reputable arbitrageurs to resolve events.

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