Eurex will list a new future on 30-year German government bonds, the Euro Buxl Future, and launch it on 9 September 2005.
The new Euro Buxl Future, which replaces the current 20-30.5 year Euro Buxl Future, reflects the increasing market demand for longer-term debt and the need for a cost-efficient hedging instrument.
"With the new Euro Buxl Future, Eurex meets the increasing market demand for long duration derivatives, particularly in light of regular large ultra long issuance from institutions such as the German Finance Agency and other European Finance Agencies and changes in pension fund regulations," said Rudolf Ferscha, CEO of Eurex. "There is a strong need for a liquid hedging tool at the very long end of the yield curve and we believe the new Euro Buxl Future will satisfy this need."
The contract specifications for the new Euro Buxl Futures have been set to better meet the increased hedging requirements of market participants at the very long end of the yield curve. The delivery window will be 24-35 years, from previously 20-30.5 years, bringing the duration of the futures contracts closer to 30 year bonds and distinguishing it from the 10 year Bund contract.
The notional coupon of the Euro Buxl Futures will be four percent, from previously six percent, creating attractive trading opportunities due to small valuation differences within the bond basket. The minimum issue size for bonds included in the new Euro Buxl Future basket will be 10 billion euros, from previously 5 billion euros, guaranteeing sufficient availability for delivery. In addition, the tick size is set at 0.02 percent (20 euros per tick) reflecting the higher risk/reward profile of a 30-year contract.
Market makers will continuously provide tight markets, thus ensuring liquidity in the new product from day one.