NASDAQ' RIBA To Trade Against Riksbanken's Repo Rate

NASDAQ OMX Stockholm will be the first exchange in Europe to launch a policy rate futures contract RIBA based entirely on the repo rate set by Riksbanken, the Swedish Central Bank. The RIBA contract will enable investments based on expected

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NASDAQ OMX Stockholm will be the first exchange in Europe to launch a policy rate futures contract – RIBA – based entirely on the repo rate set by Riksbanken, the Swedish Central Bank.

The RIBA contract will enable investments based on expected trends in the repo rate, and will be traded with central counterparty clearing.

RIBA will be traded in the over-the-counter market, off the stock exchange. NASDAQ OMX Stockholm has signed contracts with a number of market makers, including Danske Bank, Nordea, RBS, SEB, Svenska Handelsbanken and Swedbank that have agreed to maintain and ensure a favorable level of liquidity in RIBA. Trades in RIBA contracts will be reached through bilateral negotiations between buyers and sellers, and reported to NASDAQ OMX Stockholm for central counterparty clearing.

RIBA is a cash-settled futures contract with a term corresponding to the period between two IMM (International Money Market) dates, and computed for final settlement based on the average repo rate for a given period of time. The contract base is a fictitious loan with a nominal value of SEK 1 million.

“The Central Bank’s monetary policy is critically important to interest rate levels in the capital market, and our Riksbank future contract, RIBA, will make it possible to interpret market expectations with regard to key interest rates,” says Erik Theden, president, NASDAQ OMX Stockholm.

“The information will benefit both home buyers and asset managers. In the wake of the financial crisis, we have noted an increased focus on efforts to lower counterparty risks and, accordingly, we will serve as the counterparty both for buyers and sellers of RIBA.”

“Members of the Money Market Council look forward to working with NASDAQ OMX in extending offers to trade against the Swedish Central Bank’s repo rate,” says Erik Ekman, chairman of The Swedish Money Market Council. “We see excellent potential for favorable trading in RIBA, and our members have jointly agreed to actively support liquidity in the contracts.”

L.D.

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