The Chicago Mercantile Exchange expects to bring more liquidity to the European inflation market, with a new futures contract that includes five trading firms.
CME selected Barclay’s Capital, IXIS GIB, Lehman Brothers, Nomura International and The Royal Bank of Scotland as market players.
The new CME Eurozone HICP futures contract began trading on September 19, 2005 on the CME Globex trading platform.
“Our new contract is designed specifically for European market participants and fills a crucial gap in the Eurozone inflation swap market, which currently lacks short-term, inflation-linked instruments,” said Robin Ross, managing director of CME interest rate products. Ross predicts the trading firms will urge liquidity and allow its users to leverage the hedging benefits.
Charles Harris, head of the Royal Bank of Scotland’s inflation trading, anticipates that “volumes and liquidity will naturally grow over time from user looking for more hedging techniques and others looking for increased relative value opportunities.”