Eurex, a leader in the futurization of traditional over-the-counter financial products, has broadened its global trading and clearing options for Credit Index Futures. As of September 23, the exchange launched futures based on the Bloomberg US Corporate Index and the Bloomberg US High Yield Very Liquid Index, becoming the first exchange to provide a comprehensive global offering of Credit Index Futures.
Global Product Suite Across Currencies
Since 2021, Eurex has been developing its Credit Index Futures product suite, which includes standardized, exchange-traded contracts that leverage a well-established derivatives structure. This allows participants to hedge or take synthetic long positions in global credit markets. The suite now encompasses EURO Investment Grade, EURO High Yield, USD Emerging Markets, and GBP Investment Grade index futures, in addition to the newly introduced U.S. Investment Grade and High Yield corporate bond contracts.
Enhanced Risk Management Efficiencies
With these new products, investors can trade global benchmark index futures and achieve significant margin savings via the Eurex Clearing Prisma risk management system. Eurex plans to optimize margin processes by enabling offsets between Fixed Income Futures and Credit Index Futures, enhancing efficiency for market participants.
Lee Bartholomew, Global Head of FIC ETD Product Design, emphasized the goal of creating a “one-stop shop” for this new asset class, noting the added efficiencies in margin and capital management that will benefit users.
Growing Demand from Asset Managers
Demand for Credit Index Futures is on the rise in Europe, driven by end clients seeking versatile, liquid, and cost-efficient investment vehicles. In August 2024, Eurex reported a monthly traded notional of over EUR 26.7 billion in Credit Index Futures, with an outstanding notional total of EUR 1.8 billion.
Umesh Gajria, Global Head of Index Linked Products at Bloomberg Index Services Limited, noted that the demand stems from real money managers and pension funds looking to enhance beta exposure or hedge risks tactically. He expressed pride in Eurex’s decision to expand its portfolio of credit futures with Bloomberg indices, addressing these investor needs.
Eurex’s U.S. dollar Credit Index Futures have received approval from the U.S. Commodity Futures Trading Commission (CFTC) for trading by U.S.-based investors.
