Case | HBS Case Collection | 1996 (Revised from original version)

Futures on the Mexican Peso

by Kenneth A. Froot, Matthew McBrady and Mark Seasholes

Abstract

The Chicago Mercantile Exchange needs to decide how to design, and whether and when to introduce, a futures contract on the Mexican peso.

Keywords: Exchange rates; money markets; futures market; country analysis; International Finance; Financial Markets; Futures and Commodity Futures; Financial Services Industry; Chicago; Mexico;

Format: Print

22 pages

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Citation:

Froot, Kenneth A., Matthew McBrady, and Mark Seasholes. "Futures on the Mexican Peso." Harvard Business School Case 296-004, October 1996. (Revised from original August 1995 version.)

UAL is a large air transportation company with roots that go back to the 1920s. As a legacy carrier, going back to before the 1978 deregulation of air transportation markets, United Airlines is burdened with cost structures that make it difficult to compete with newer competitors. In addition, UAL has the burden of $7.6 billion in unfunded pension obligations and $2 billion in unfunded retiree health obligations. In June 2004, UAL is still operating under Chapter 11 bankruptcy protection, which began December 2002. It has needed extensions of the exclusivity period from the bankruptcy court. UAL's plan of reorganization is predicated on receiving $1.8 billion in loan guarantees from the Air Transport Stabilization Board (ATSB). But its request for loan guarantees from the ATSB was recently rejected. The company must decide what to do next and how to emerge from bankruptcy.

Kishore Karunakaran, President and COO of FFCM, faces a variety of challenges in launching an innovative investment management business in the rapidly evolving ETF space.

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