Nano futures are smaller versions of traditional futures contracts, designed to give traders exposure to major financial markets with substantially less capital. They work in much the same way as standard futures but have smaller contract values, allowing more precise position sizing and potentially lower margin requirements.
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What are nano futures?
A futures contract is an exchange-traded agreement whose value is linked to an underlying asset or index. Futures are leveraged, so traders only need to deposit a proportion of the contract’s overall value as margin rather than paying its full notional value.
Nano futures take this concept and dramatically reduce the size of each contract.
CME Group’s E-nano Equity Index futures, for example, are one-tenth the size of its Micro E-mini futures and one-hundredth the size of the corresponding E-mini contracts.
The contracts still track exactly the same underlying indices and provide around 23-hour-a-day trading, but each movement in the market has a much smaller dollar impact.
Where can you trade nano futures?
Nano futures are exchange-traded rather than being contracts created by an individual broker. CME Group’s E-nano S&P 500, Nasdaq-100 and Russell 2000 futures are listed on CME, while E-nano Dow futures are listed on CBOT.
Retail traders can access them through futures brokers including Interactive Brokers and Plus500 US. CME also lists Interactive Brokers among the brokers supporting E-nano Equity Index futures.
Plus500 currently offers all four E-nano equity contracts through its US futures platform. Interactive Brokers also specifically includes NES, NNQ, N2K and NDOW within its E-nano futures pricing schedule.
What are the nano futures contract sizes?
There are currently four CME Group E-nano US equity index futures:
| Market | Code | Nano contract size | Micro E-mini | E-mini |
|---|---|---|---|---|
| S&P 500 | NES | $0.50 × index | $5 × index | $50 × index |
| Nasdaq-100 | NNQ | $0.20 × index | $2 × index | $20 × index |
| Russell 2000 | N2K | $0.50 × index | $5 × index | $50 × index |
| Dow Jones | NDOW | $0.05 × index | $0.50 × index | $5 × index |
For example, if the S&P 500 stood at 7,000, an E-mini contract would represent $350,000 of notional exposure, a Micro E-mini $35,000 and an E-nano just $3,500.
Smaller-sized futures are also available on other markets, although CME does not necessarily call all of them “E-nano”. These include smaller contracts on gold, silver and other commodities.
What markets can you trade with nano futures?
The current CME E-nano Equity Index range covers four of the main US stock market benchmarks: the S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average.
This means traders can use nano futures to take a broad view on large US companies, technology-heavy Nasdaq stocks, smaller US companies through the Russell 2000, or the 30 blue-chip companies represented by the Dow.
Who regulates nano futures?
US exchange-traded futures markets are overseen by the Commodity Futures Trading Commission (CFTC). CME and CBOT operate as CFTC-regulated Designated Contract Markets.
Futures brokers and Futures Commission Merchants are generally required to register with the CFTC, while registered FCMs and introducing brokers must also be members of the National Futures Association (NFA).
This differs from CFDs, where you are normally trading an over-the-counter contract with your broker rather than a futures contract on a central exchange.
What are the alternatives to nano futures?
The closest alternatives are Micro E-mini futures, which work in essentially the same way but provide ten times as much exposure. More experienced or larger traders can also use E-mini futures, which are 100 times the size of the equivalent E-nano contract.
Other alternatives include ETFs for investors who want to own an instrument tracking an index without futures leverage, options for traders who want defined contractual rights rather than a futures obligation, and CFDs in jurisdictions where they are available.
Nano futures are primarily suited to active traders who want the transparency and extended trading hours of exchange-traded futures but want to trade in smaller increments. However, the smaller contract size does not eliminate leverage or risk: futures prices can move quickly, and the CFTC warns that futures speculation is complex and can result in losses exceeding the amount initially deposited.