New York Futures Exchange (NYFE)

What Is the New York Futures Exchange (NYFE)?

The New York Futures Exchange (NYFE) was a subsidiary of the New York Stock Exchange (NYSE) focused on the trading of futures and options contracts, mainly pertaining to NYSE stock index futures.

Founded in 1980, the NYFE has since undergone several mergers and acquisitions, including a combination with several other commodities exchanges in 2004 to create the New York Board of Trade (NYBOT). Most recently, in 2007 the NYBOT and all of its subsidiaries were acquired by the Intercontinental Exchange (ICE), today, known as the ICE Futures exchange.

Understanding the New York Futures Exchange (NYFE)

One of the factors contributing to the growth in popularity of these instruments was the relatively severe inflation experienced in the U.S. during the 1970s. In this environment, traders were eager to find tools that would allow them to hedge their interest rate and inflation risks. Financial products such as bond and stock index futures became a popular tool, encouraging the development of increasingly diverse and complex derivative products.

Today, these types of products are available not only for individual securities, but also for indices, currencies, and even other derivatives.

Today, the legacy of the NYFE continues through the ICE, an American holding company that owns a portfolio of financial marketplaces including the NYSE and several clearinghouses that help ensure the smooth functioning of the modern financial system. As of 2019, ICE was the fourth-largest derivatives marketplace in the world, with nearly 2.3 billion derivative contracts changing hands through its various marketplaces.

Real-World Example of the NYFE

Although the NYFE is no longer in existence, the kind of financial derivative trading that it was once known for has only grown in popularity. Today, the various derivative marketplaces operated by ICE and other exchange operators facilitate the trading of far more products than were available under the NYFE. Examples include interest rates, physical commodities such as coffee beans or metals, currency pairs, or even carbon credits.