Bright outlook for Eurex fixed income futures

In the first half of 2003, approximately 129 million Bund Futures, 78 million Bobl Futures and 59 million Schatz Futures were traded on Eurex.


The latest figures indicate that the total volume of the Euro Bund, Euro Bobl and Euro Schatz Futures contracts is continuing its sharply rising trend of recent years.


Combined open interest stood at 1,854,159 million contracts at the end of June 2003.


Eurex's Euro Bund, Euro Bobl and Euro Schatz Futures are the world's most heavily traded fixed income futures. The benchmark status of these products is in part derived from the leading status of German government bonds.


Prior to the start of the European Monetary Union, German government bonds became the benchmark within the European government bond market due to their liquidity, their high quality and the size of the cash market as well as the existence of well-developed repo and derivatives markets.


The introduction of the Euro extended the leading position in this product segment due to the elimination of currency risk within the European Monetary Union.


The diminution in interest rate differentials between the debt instruments of the various members of the European Monetary Union resulted in the reduction of basis risk and led to a consolidation of this segment.


In addition to hedging pure duration risk of euro-denominated portfolios, the Euro Bund, Euro Bobl and Euro Schatz Futures allow investors to enter positions based on interest rate movements.


Investors are able to use these products to take relative value positions between different maturity ranges or market segments as well as to arbitrage between the cash and futures markets.


For these purposes, Eurex provides the fixed income market with the most liquid marketplace for interest rate derivatives in the world.


For more information about the basics of futures and Eurex products click here: http://www.hedgemedia.com/feature.asp?FeatureID=5A5C212D-492C-4F5C-8F01-7583F4839800


Copyright Hedgeweek 2003



 

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