Eurex plans to start trading futures and options on exchange-traded funds (ETFs) from November 18 this year, the derivatives exchange told delegate at the 23rd Brgenstock Meeting near Lucerne, Switzerland.
“With these new products, Eurex will be the first exchange worldwide to offer futures on ETF, and the only European exchange with this product segment,” says Eurex. “Options on ETF have up to now only been offered in the United States and are among the most-traded options there. The new futures and options at Eurex would be offered initially on leading European ETF. Eurex added that international trading firms will conduct active market-making operations in the new products from the time they are launched in order to provide for orderbook liquidity from the very beginning.”
Futures and options on ETF offer custom-made hedging opportunities for the underlying exchange-traded funds, as Eurex CEO Rudolf Ferscha explained. Ferscha said: “With derivatives on exchange-traded funds, we are offering the market innovative instruments to fine-tune the risk in this new growth market. Derivatives products on ETF have a high benefit for the customer and they are an ideal complement to our existing index derivatives segment.”
In April 2000, Deutsche Brse, which in addition to SWX Swiss Exchange, is a parent company of Eurex, became the first European exchange to offer a segment for exchange-traded funds. In the meantime, the XTF segment has established its position as the leading market segment for exchange-traded funds in Europe. There are currently 57 index funds and 14 actively managed equity funds listed in the XTF segment, and 98 percent of the turnover in these fund products in Germany is posted on Xetra, the leading European trading system in the cash market. SWX has been offering a corresponding Swiss ETF segment since March 2001.