Following the launch of futures and options on the popular MSCI EAFE index that represents the developed markets of Europe, Australasia and the Far East, Eurex has become the only exchange that offers futures and options on all major MSCI indexes.
And with the introduction of futures on the EURO STOXX 50 Corporate Bond Index, Eurex is the first mover offering an exchange traded market for the corporate bond segment in Europe.
The new products meet the market’s needs, especially those of the buy side whose investment behaviour is undergoing structural changes. Passive products like Exchange Traded Funds (ETF) are gaining momentum. This affects the derivatives markets because it creates new hedging needs for asset managers.
“We aspire to become the leading derivatives exchange for global and broad based indexes. The latest launches and record volumes in our MSCI segment show that we are on the right track,” says Thomas Book, Eurex CEO and Head of Derivatives Markets Trading at Deutsche Börse Group.
MSCI EAFE is the leading benchmark for American investors, seeking international equity performance. According to figures from MSCI, roughly 2 trillion USD are benchmarked against this index. The EURO STOXX 50 Corporate Bond index is the only index that tracks the performance of Euro-denominated, investment grade corporate bonds of the EURO STOXX 50 constituents.
“The European market for corporate bonds plays a key role in the financial ecosystem. It has grown consistently after the financial crisis, both in terms of market participants and overall assets under management,” says Mehtap Dinc (pictured), Member of the Eurex Board and Head of Derivatives Product Development at Deutsche Börse.
The new environment creates demand for innovative hedging solutions in the form of Exchange Traded Derivatives. “The same is true for MSCI products. With more providers of MSCI related vehicles and growing competition on pricing these, an increased need for cost-effective and efficient hedging tools in the form of futures and options arises,” Dinc added.
Eurex’ latest trading statistics saw a record in the MSCI segment: June saw more than 1.8 million traded contracts – a plus of 114 percent compared to June 2016. Also, market participants once again relied on Eurex’ fixed income suite of products (+6 percent). On the clearing side, Eurex noted strong demand for its EurexOTC Clear services. The notional outstanding reached 1.5 trillion EUR.