XAU/USD Spot Gold Futures

“ Groundbreaking Product Simulates OTC Gold Market with Protections Compliant with Dodd Frank ”

Overview

NASDAQ OMX Futures ExchangeSM (NFXSM) XAU/USD Spot Gold FuturesTM (patent pending) 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.

You can reach additional information regarding this product here.

Background

In cooperation with NASDAQ OMX Futures Exchange, IKON Global Markets 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.

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 futures contracts.

Click here to see historical swap data.

XAU/USD Spot Gold Futures Key Features

• 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
• Retail Sized 10 oz. contracts
• Data Vendor Codes:
   Bloomberg: MGL22
   Thomson: NAU/Z2
   Reuters: <0#NUA:>

Getting Started

For more information about NASDAQ OMX XAU/USD Spot Gold FuturesTM contact at 1-212-482-8408 or info@ikongm.com.

Why XAU/USD Spot Gold FuturesTM?

In cooperation with NASDAQ OMX Futures Exchange, IKON Global Markets, 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 FuturesTM (patent pending) 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 Global Markets, 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 FuturesTM (patent pending) 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 FuturesTM (patent pending) 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 to10 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 contracts will the exchange initially list for XAU/USD Spot Gold Futures?

The launch date will be Wednesday, February 8, 2012. The Exchange will initially list a “December 2012” contract maturity.

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 the third last business day of contract month.

On what trading platform will XAU/USD Spot Gold Futures be listed?

IKON Gold Futures will be traded on NASDAQ Futures Exchange (NFX) XL.

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 be clear XAU/USD Spot Gold Futures?

OCC will clear the XAU/USD Spot Gold Futures.

Disclaimer

IKON Global Markets, Inc. (IKON) has developed the intellectual property behind the XAU/USD Spot Gold Futures Product and developed this Product with the NASDAQ OMX Futures Exchange. IKON, as a registered futures commission merchant (FCM), is likely to carry the accounts of customers who trade the Product. IKON is also currently the single market maker in the XAU/USD Spot Gold Futures contract, meaning that when a customer trades the Product, while that customer may be trading with another customer on the opposite side of the trade, they in many instances could also be trading with IKON on the opposite side of the trade. As a result, when you lose money trading the Product, if IKON is on the other side of the trade, then it is making money in addition to any fees and commissions it is charging as an FCM if your account is carried at IKON. The extent of IKON’s profit on a trade in which it acts as a market maker will depend upon when IKON offsets the trade. It is anticipated that the NASDAQ OMX Futures Exchange will add more liquidity providers for the Product in the near term.

Due to the fact that the NASDAQ OMX Futures Exchange does not maintain a 24 hour match engine, between 7:55 am and 8 am EST, a customer cannot place new working orders and cannot cancel or amend existing working orders. However, during this time frame, market orders will be accepted to close positions or open new positions. Also, during the referenced time frame, if the market violates the price of a working order, it will not be executed.



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