What Are FutureSports Performance Indexes (FSPI)?

The Big Picture

You already know how a stock index works. The S&P 500 index represents the performance of 500 leading publicly traded companies across major industries and represents a broad cross-section of the U.S. equity market. The index value is a single number that reflects relative changes in the combined float-adjusted market value of those companies compared to the base period. When those companies do well (share prices increase), the index goes up. When they don't (share prices decrease), it goes down.

FutureSports Performance Indexes, or FSPI, apply the same idea to sports teams. FutureSports builds each index from official league data to measure how well a team is performing, based on in-game statistics such as, for example for hockey teams, goals, shots on goal, saves, blocked shots, takeaways, and penalties. Dozens of stats accumulate into one number, the index value. Each team index is published under a CME FSPI name, such as the CME FSPI NHL Chicago Blackhawks Index.

When a team goes on a hot streak (performs positively), its index value rises. When it slumps (performs negatively), the index value falls. Just as futures contracts are listed on the S&P 500 index, CME Group plans to list futures contracts on NHL Team indexes beginning September 28, pending regulatory review, so you can take a position on where you think a team's performance is heading.

How Are FSPI Different from Prediction Markets?

A prediction market contract is a binary call option. For example, will the team win tonight? Yes or no. The contract pays a fixed amount if the event happens and nothing if it does not.

FSPI aren't tied to a single game or event or to a single statistical measure. The index is a continuous measure of multiple performance elements measured over time. FSPI measures and quantifies “how well the team performed” through the measurement of multiple in-game statistics. The FSPI methodology is not asking “will a team win?” It measures how well the team played, game after game, across multiple measures of performance during the whole season.

What's in the Index?

Each index is built from official league statistics, using the same data the leagues track themselves. The NHL team indexes use 55 constituents. These include goals by type, shots on goal, saves, faceoffs, blocked shots, hits, takeaways and giveaways, penalties, and milestones such as a shutout or a monthly scoring lead. Each constituent carries a multiplier that reflects how much it contributes to overall team index performance.

FutureSports Performance Indexes are computed in real time using official league statistics. During a game, the index moves as plays happen. During and between games, it reflects cumulative performance. The official Index Close for each calculation day is published at 9:00 AM Central Time on the following calculation day, and that published level is the official value of the index for the day. A futures contract that references the index settles to the official Index Close at expiration, on the date set in the CME Group contract specifications, while the contract's daily settlement prices are set by CME Group under its own procedures.

Why Does This Exist?

• Businesses in sports, from financing a stadium to sponsoring a team to insuring athletes, need a way to manage exposure to team performance.
• Fans with strong views on which teams are trending up or down can use FSPI to quantify performance. Futures listed by CME Group provide a means for investors to express those views as a trade.
• Sports fans who want to track their favorite team can follow its performance using FSPI. You cannot invest directly in an index. Futures contracts listed by CME Group that reference the indexes give investors exposure to the performance of a specific team, such as the FSPI NHL Team indexes.
• Fans and season-ticket holders can take a position in either direction, including on a down season for their home team.

If you already follow prediction markets, FutureSports Performance Indexes measure something different. They track performance continuously across a season from official statistics, and the futures that reference them let you express a view over a longer time horizon.

How can FSPI-based Derivatives Be Accessed?

Futures contracts that reference the indexes are listed by CME Group. A long position gains when the index rises and a short position gains when it falls, so the contracts can be used to express a view or to manage exposure. Standard contracts are valued at 10 times the index and micro contracts at one tenth of the index. Contracts cash-settle to the official Index Close. Access is through a futures broker with CME market access.

How Are They Regulated?

Futures on the indexes are listed by CME Group, the world's leading derivatives marketplace, on a CFTC-regulated designated contract market and cleared through CME Clearinghouse. The indexes themselves are administered by FutureSports under a methodology aligned with the IOSCO Principles for Financial Benchmarks, with published governance and oversight procedures. FutureSports does not distribute futures products. FutureSports is not a broker, futures commission merchant, or exchange and does not provide investment advice. Please visit CME Group or your broker for more information.

What Sports Indexes Are Currently Available?

• CME FSPI NHL Team indexes
• CME FSPI MLB Team indexes
• Additional sports to follow

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FutureSports: The index infrastructure for Sports as an Asset Class.