The Chicago Mercantile Exchange announced earlier in the summer that following the expiry of the September 2010 contracts, e-micro currency futures contracts would change to being physically delivered:
CME FX will be migrating the E-micro Forex futures contracts from being cash settled to physically delivered. The December contract will be listed for trading on Sunday, July 25 (trade date Monday, July 26). This will enable active traders to carry larger positions in the E-micros and easily offset them with our standard size FX contracts – potentially generating more liquidity and tighter spreads in the E-micro Forex futures contracts.
Most of those September contracts expire today (USD/CAD does so tomorrow), and so from now on all e-micro currency futures contracts will involve physical delivery instead of cash settlement. CME explain the difference between cash settlement and physical delivery as follows:
More on CME E-micro Currency Futures Now Physically Delivered
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If you've been following the story about the new CFTC regulations regarding retail forex in the United States you may well have come to the conclusion that for some reason the CFTC thinks "on-exchange" trading is better than "off-exchange" (OTC) trading. Last year the Chicago Mercantile Exchange (CME for short) introduced smaller currency futures contracts designed to provide an exchange traded product that might appeal to the retail forex trader.
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Prompted by a comment from Michael to a post about the hedging ban, here's some more information about regulated alternatives to over the counter retail forex.
The Chicago Mercantile Exchange (CME for short) first introduced currency futures contracts back in 1972. These "full-size" contracts were traded using the venerable open outcry method, which involved traders gesticulating and shouting at each other across a trading pit.
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