Nasdaq launches spot gold futures Nasdaq OMX, the global exchange group, is prospecting for new markets by branching out into US precious metals trading, with the launch of spot gold futures. In a partnership with IKON Global Markets, a commodity trading merchant, Nasdaq yesterday launched futures contracts on gold that are settled with cash rather than the delivery of physical gold. IN Clearing & Settlement Gold has seen a surge in investor interest amid substantial market volatility, as well as fears that expansionary monetary policy by central banks will lead to future inflation. The price of gold, which hit nominal records last year, has been highly volatile in recent months. At present, gold is primarily traded via forward agreements or spot physical markets in London dominated by large banks. Most small investors trade gold via exchange-traded funds in the US. Nasdaq's contracts aim to simulate spot trading for individual traders. The contracts, which have one expiration per year, currently December 2012, will reference physical spot gold prices. To have the cash settlement match the cost of holding gold, the holder of the future will be required to pay a daily cost of storing the gold to the dealer, an amount to be calculated by Ikon. The contracts will be centrally cleared via the Options Clearing Corporation, in order to meet Dodd Frank act requirements that standardised derivatives be cleared via a central counterparty. "By combining the components of a futures contract with the integrity of the OTC spot gold market, this is a natural progression of the customer protections and transparencies dictated by that legislation," said Diwakar Jagannath, IKON chief executive. There are gold futures listed on the NYSE Liffe US and CME Group markets. The listed Liffe US futures have some 1,600 contracts in open interest and the CMEs have about 435,000, which is relatively small by CME's standards. CME's contract is the most liquid gold future, but just fraction of the exchange's 12m average daily futures trades. So far in 2012 CME has has traded 227,000 gold contracts daily, in futures as well as over-the-counter contracts via ClearPort. The main Liffe US and CME futures trade in 100 troy ounce units, while Nasdaq's contracts can be agreed with as few as 10 ounces. CME also last year launched a "mini" gold future at 10 ounces per contract. Nasdaq, which operates primarily in cash equties and options in the US, and the Nordic countries via OMX, has until now had little exposure to futures or commodities. It acquired an energy trading market in the Nordic countries in 2010. As part of its acquisition of the regional Philadelphia exchange in 2007, Nasdaq also took on a small futures exchange, the Philadelphia Board of Trade. It was renamed Nasdaq OMX Futures Exchange, or NFX, and trades currency futures.