A member of
Eurex
As of Friday, 2 December 2016, Eurex, Europe's largest derivatives exchange, will offer Total Return Futures on the EURO STOXX 50® Index. The new futures complement the Eurex suite of equity index derivatives and support the market in complying with new financial market legislation. Under the Basel III capital standards banks already face increased capital requirements when entering Over-the-Counter (OTC) transactions. From next year on, there will be additional standards. "The product is launched ahead of the bilateral margin rules on non-cleared swaps which are likely to be introduced in Europe in early 2017“, said Mehtap Dinc, Global Head of Derivatives Product Development at Eurex.
The new requirement to set aside more capital for OTC derivatives transactions already applies in the US and Japan. It is likely to further change the structure of derivatives markets by supporting the trend to Exchange Traded Derivatives that regulators are aiming for. Eurex Total Return Futures will offer returns analogous to Total Return Swaps; thus representing a functional replacement for these OTC instruments. "We therefore expect market participants to cut back on their OTC swap positions and instead choose futures to meet their trading and hedging needs in the months to come", Dinc stated further.
Another key argument for futures products is their standardisation. Contracts that offset each other can be netted out through clearing, offer cross-margining, and the processing of trades is greatly simplified. On top, Eurex Clearing acts as central counterpary, mitigating counterparty risks. “We expect that larger market participants will adopt the new Total Return Futures, and the transparency and fungibility they provide, to meet their hedging needs in the months to come,” said Régis Lavergne, Deputy Global Head of Equity Derivatives in charge of trading activities at Natixis.
"This is exactly the right time to launch Total Return Futures. They allow the market to continue trading in the new regulatory environment with stronger capital requirements by replicating OTC products whilst introducing the liquidity and position netting available in a standardised futures“, commented Emmanuel Dray, Head of EQD Institutional Sales & Linear Trading at BNP Paribas.
Eurex has a long standing track record of product innovation and constantly continues to innovate in order to meet the market needs. The new futures contract design is aimed at replicating the payout profile of the funded purchase of a cash equities basket representing the components of the underlying index. In line with current market convention the Total Return Futures will trade in „spread“ in basis points and allow the implied repo rate associated with cash basket replication to be traded for the first time.
Media contacts:
Irmgard Thiessen
Spokesperson for Eurex, Eurex Clearing and Eurex Repo
Mergenthalerallee 61
65760 Eschborn
T +49-(0) 69-2 11-1 59-11
Christina Hudelmayer
Spokesperson for Clients, Products & Core Markets division
Mergenthalerallee 61
65760 Eschborn
T +49-(0) 69- 2 11-1 78 54
Market Status ⓘ
XEUR
The market status window is an indication regarding the current technical availability of the trading system. It indicates whether news board messages regarding current technical issues of the trading system have been published or will be published shortly.
Please find further information about incident handling in the Emergency Playbook published on the Eurex webpage under Support --> Emergencies and safeguards. Detailed information about incident communication, market re-opening procedures and best practices for order and trade reconciliation can be found in the chapters 4.2, 4.3 and 4.5, respectively. Concrete information for the respective incident will be published during the incident via newsboard message.
We strongly recommend not to take any decisions based on the indications in the market status window but to always check the production news board for comprehensive information on an incident.
An instant update of the Market Status requires an enabled up-to date Java™ version within the browser.