• On 23 September Eurex launched Bloomberg US Corporate Index Futures and Bloomberg US High Yield Very Liquid Index Futures.
• Eurex becomes the first exchange to offer a global product suite of Credit Index Futures.
• This will help clients to capitalize on risk management efficiencies across products and reduce capital costs.

Eurex is a pioneer in the futurization of traditional OTC traded financial products and is now expanding its global offering for trading and clearing of Credit Index Futures. As of 23 September, Eurex launched futures on the Bloomberg US Corporate Index and the Bloomberg US High Yield Very Liquid Index and will be the first exchange with a truly global offering of Credit Index Futures.

Global product suite across geographies and currencies

Eurex has been building its global Credit Index Futures product suite since 2021. These standardized, exchange-traded contracts utilize an established derivatives structure, widely used in the equity index futures market, to allow market participants to hedge or take synthetic long exposures to global credit markets. The current product suite includes the EURO Investment Grade, EURO High Yield, USD Emerging Markets and GBP Investment Grade index futures based on Bloomberg’s established fixed income index family.

The new Eurex contracts will cover the US Investment Grade and US High Yield corporate bond markets. Together with the Euro, British Pound, and Emerging Market Sovereign Indices, they enable Eurex market participants to hedge or gain exposure to a global set of benchmark investment strategies.

Risk management efficiencies

With these new additions to Eurex’s Credit Index Futures product suite, investors can trade global benchmark index futures and benefit from significant margin savings through the Eurex Clearing Prisma risk management system. Eurex also plans to enhance its margin optimization processes by allowing margin offsets between Fixed Income Futures and Credit Index Futures.

Lee Bartholomew, Global Head of FIC ETD Product Design: “For our Credit Index Futures product suite we have decided to go for a global approach for a one-stop shop to building out this new asset class. Combining this product suite with our other fixed income futures will add further efficiencies for market participants from a margin and capital perspective.”

Growing demand from asset managers

Demand for Credit Index Futures has been growing steadily in Europe mainly fueled by end clients looking for versatile investment vehicles which are liquid, transparent, and cost efficient. Monthly traded notional in all Credit Index Futures at Eurex stood at over EUR 26.7 billion in August 2024 with a total outstanding Notional of EUR 1.8 billion.

Umesh Gajria, Global Head of Index Linked Products, Bloomberg Index Services Limited: “Demand for credit derivatives is driven by the end user and we see real money, multi strategy, asset managers and pension funds who want to allocate additional beta or hedge risks on a tactical basis. We’re proud Eurex has chosen to expand their global portfolio of credit futures with our indices in order to address these investor needs.”

Eurex listed U.S. dollar Credit Index Futures have been approved by the U.S. Commodity Futures Trading Commission (CFTC) to be traded by U.S.-based investors.

Source: Eurex