CME Group is set to expand into sports-linked derivatives through a new long-term partnership with index provider FutureSports, with plans to launch what the companies describe as the world’s first futures and options contracts based on sports performance indexes.
The contracts, which remain subject to regulatory approval, will be linked to FutureSports Performance Indexes (FSPI), a series of benchmark indexes derived from officially reported and league-approved sports statistics. The first cash-settled monthly and quarterly futures contracts are expected to begin trading later this summer.
The initiative aims to create a new asset class that allows participants across the sports industry to hedge commercial risks while also providing institutional and retail investors with new trading opportunities.
According to CME Group, the contracts are designed to bring exchange-traded price discovery and risk management tools to the global sports sector. The exchange believes the products could appeal to a broad range of commercial users, including stadium operators, sponsors, insurers, sports apparel manufacturers, media companies and broadcasting partners whose revenues are influenced by sporting performance.
FutureSports said demand for the proposed contracts has been strong ahead of launch, with interest from both commercial hedgers and financial market participants seeking exposure to sports-related performance through regulated derivatives markets.
The indexes will be independently administered by FutureSports using transparent, rules-based methodologies intended to align with the International Organisation of Securities Commissions’ (IOSCO) principles for financial benchmarks. While official league data will underpin the indexes, the sporting organisations themselves will have no role in determining index values or governance.
FutureSports also said it plans to announce partnerships with a number of global professional sports leagues, enabling team and athlete performance data to be converted into continuously calculated benchmark indexes suitable for financial markets.
For hedge funds and other alternative investment managers, the launch represents the potential emergence of a new niche derivatives market, offering additional opportunities to trade event-driven and data-driven strategies while expanding the range of alternative assets available through exchange-listed products.
