Eurex will start trading in options and futures on ETFs on November 18. The segment at Eurex will be operated under the name EXTF. Eurex, which made the announcement in Chicago today, is the first exchangeto offer futures and options contracts on European ETFs.
The derivatives exchange says trading will begin with futures and options on DAX EX, DJ Euro STOXX EX, DJ Euro STOXX LDRS, Fresco DJ Euro STOXX 50 and XMTCH on SMI.
The EXTF futures at Eurex are settled by physical delivery and differ in that respect from the existing Eurex index futures. International trading firms will conduct active market making for the new products from the start to provide for order-book liquidity. Market makers will quote a minimum number of binding bid and ask prices within maximum spreads. The new products will be available for trading at Eurex from 9:00 a.m. to 8:00 p.m. (CET).
Futures and options on ETFs offer tailor made hedging opportunities for the underlying exchange-traded funds, Eurex said. “The EXTF derivatives are innovative risk-management tools that enable Eurex customers to fine-tune their risks in the new growth market of exchange-traded index fund shares,” it adds. “EXTF futures and options are an ideal complement to the existing index derivatives segment at Eurex and a logical and consequent extension of one of the most success fulfinancial innovations in recent years.”
Deutsche Brse, which owns Eures in conjunction with SWX Swiss Exchange, was the first European exchange to launch a segment for exchange-traded funds in April 2000. Its XTF segment currently has 63 index funds and 16 actively managed equity funds listed, and 98 percent of the turnover in these fund products in Germany is posted through Xetra. SWX has been offering a corresponding Swiss ETF segment since March 2001.