NYSE Liffe is to expand its index derivatives franchise with the launch of futures based on MSCI Factor Indices.
NYSE Liffe expects to introduce the industry’s first futures contracts on MSCI Equal Weighted Indices and MSCI Minimum Volatility Indices on 3 February via Bclear, the exchange’s wholesale facility.
The following new contracts will be available:
• MSCI Emerging Market Minimum Volatility and Equal Weighted Futures
• MSCI Europe Minimum Volatility and Equal Weighted Futures
• MSCI USA Equal Weighted Futures
• MSCI World Minimum Volatility and Equal Weighted Futures
Also known as Smart Beta Indices, these benchmarks have become increasingly popular with the investor community as they seek to reflect the performance characteristics of a range of investment styles and strategies using transparent and rules-based methodologies.
“As we support the evolving requirements of our customers, the addition of Minimum Volatility and Equal Weighted index futures contracts will enable market users to directly implement smart passive strategies via NYSE Liffe’s flexible and cost effective Bclear platform,” says Ade Cordell, executive director of equity derivatives, NYSE Liffe. “We are pleased to be the first exchange to offer these futures contracts by working closely with users such as Seven Investment Management (7IM), leading banks and MSCI.”
Chris Darbyshire, chief investment officer, 7IM, says: “We have been looking for the most efficient methods to implement smart passive strategies. NYSE Liffe futures provide us with our preferred smart passive strategy in one transaction. Using Bclear we also have clarity on trading frictions, we can avoid the cost of intermediary providers and are also able to eliminate counterparty risk - all a good result for our clients.”
“MSCI’s Factor Indices are designed to reflect the performance of systematic returns associated with certain key investment styles. Indices such as the MSCI Minimum Volatility and MSCI Equal Weighted families are fast becoming the market standard in capturing these systematic returns,” says Baer Pettit, managing director and global head of the MSCI index business. “The introduction of futures based on these indices on the Bclear platform shows NYSE Liffe’s commitment to continuously stay ahead of the trends in the investment and derivatives markets.”