Eurex to launch volatility futures and expand equity index derivatives

Eurex is preparing to launch volatility futures allowing users to hedge against volatility fluctuations on the German, Swiss, and European equity markets.


The launch of the new futures is scheduled for 19 September, allowing market participants to hedge for the first time using an exchange-traded futures family. The move is expected to enhance the position off Eurex at the cutting edge of financial futures products.


"The new products mean that Eurex will be offering market participants access to volatility as an independent asset class. They allow Eurex participants to take advantage of discrepancies in volatility within the European equity markets, to implement new trading strategies, and to hedge their portfolios against volatility fluctuations," explained Rudolf Ferscha, CEO of Eurex.


The new financial futures are based on the VSTOXX indices for volatility in the euro zone, the VSMI index for volatility on the Swiss equity market, and the VDAX NEW index for volatility on the German equity market.


All of the indices are calculated by Deutsche Börse on the basis of the corresponding index options for the Euro STOXX 50 (for the VSTOXX index), the DAX (for the VDAX NEW index), and the SMI (for the VSMI index).


The volatility indices were launched in April of this year. Market makers are guaranteeing liquid trading in the new volatility futures from the outset.


Eurex expands equity index derivatives product range


Eurex is also set to introduce futures and options on the DJ STOXX 600 equity index and the pan-European midcap index DJ STOXX Mid 200 on 19 September this year.
"These new products will enable us to offer tailor made trading and hedging instruments for broad-based European equity indices and European midcap indices," said Rudolf Ferscha, CEO of Eurex. "This move will further reinforce our position as the leading marketplace for European index products."


Eurex's introduction of the new futures and options is designed to meet the growing demand for derivatives products on broad-based European equity indices. The DJ STOXX 600 index is currently used as the benchmark for many European portfolio managers. The index comprises 600 equities and covers 95 percent of the market capitalization of all listed companies in Europe.


The new derivatives product complements the existing range of European sector
index derivatives and offers Eurex participants additional trading and hedging opportunities. Eurex has offered trading of futures and options on all 18 sectors of the DJ STOXX 600 and all 18 sectors of the DJ Euro STOXX 200 since November 2004.


With futures and options on the DJ STOXX 200 Mid index, Eurex is the first exchange to offer derivatives on a pan-European midcap index and expands its product range on midcap equity indices. Eurex has introduced a futures contract on the German MDAX equity index in March. On September 19 this year a futures contract will be launched on the Swiss midcap equity index SMIM. Market makers will guarantee liquid trading in the two new products from the very start.

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