The international derivatives exchange Eurex will extend its single commodity product offering with new futures and options based on silver on 15 June 2009. Like the previously launched gold derivatives, the silver products are US dollar denominated and cash settled contracts: They will be based on the benchmark London silver fixing.
Peter Reitz, member of the Eurex Executive board, said “Silver derivatives are the first logical product extension after gold. Our decision was also triggered by the interest from current gold market participants. Our silver contracts will foremost complement the existing OTC market. Market participants will benefit from greater transparency and central clearing in this market.”
With its silver contract, Eurex especially aims to offer access to clients who prefer or require a cash settled contract. Only a small percentage of forward transactions actually result in physical delivery, therefore Eurex’s cash settled contracts can accommodate both physical and financial market participant’s requirements. Market makers will ensure a liquid order book from the launch date. The exchange also adds value to the OTC market through its clearing facilities which allow bi-lateral negotiation of trades combined with straight-through processing on a single platform and central clearing, thereby mitigating counterparty risk. To attract OTC flow, the new products will have a block trade size of one contract and can be cleared via the Eurex сlearing OTC facility.
Eurex’s gold derivatives were launched in February 2009. Since then, several market makers are active providing permanent prices in the futures. Trades were made each day from a broad member base in the US, Europe and the Middle East. Until early May, more than 3,000 contracts have been traded.
D.C.