International derivatives exchange Eurex will be launching new dividend futures on 24 February based on the dividends of thirteen UK equities: Anglo American, AstraZeneca, Barclays, BHP Billiton, BP, BT Group, Diageo, GlaxoSmithkline, HSBC Holdings, Rio Tinto, Royal Dutch Shell, Tesco and Vodafone.
These new dividend futures expand the existing Eurex range of exchange-listed dividend derivatives, currently comprising five index dividend futures, 66 futures on single stock dividends and one option on the EURO STOXX 50 dividend future. The entire dividend derivative segment has grown year-on-year by 36 percent in terms of average trading volume.
“There is great demand for dividend contracts among our participants, so we worked together to expand the product range,” says Eurex Executive Board member Peter Reitz. "Now for the first time, the dividends from single stocks in GBP and USD can be hedged with an exchange product.”
The specifications of the new contracts largely correspond to existing dividend products. A designated market-making program will be offered for the new dividend futures from the start in order to make prices in the order book continuously available and to support trading activity. Eurex will be offering annual contracts denominated in Pounds Sterling, US dollars and euros with maturities between December 2011 and December 2015.
The trading volume of Eurex dividend derivatives traded on-exchange and cleared via the central counterparty has grown continuously since introduction in 2008. The average volume traded daily at the end of January was around 24,000 contracts, of which around 21,500 were futures and 2,400 dividend options. The dividend option exceeded 50,000 contracts in one month for the first time in January 2011 – a new record. The single stock dividend futures recorded their second-best month with over 120,000 contracts, of which around 19,000 were recently introduced Swiss products, which thus recorded their best trading month.