STOXX And Eurex Expand ESG Footprint To US
Qontigo’s global index provider STOXX Ltd. has licensed the STOXX USA 500 ESG-X Index as an underlying for listed futures on the international derivatives exchange Eurex. The new futures contract is scheduled to be launched on February 10, 2020, well ahead of the quarterly roll. Eurex will expand its ESG derivatives product suite exactly one year after its successful launch of the first futures on STOXX ESG indices. This is part of a broader strategy to take the Eurex ESG offering to a global level.
— Eurex (@EurexGroup) December 5, 2019
“The Eurex STOXX USA 500 ESG-X futures will be the first listed derivative covering the US market which includes a screening for thermal coal mining and coal-fired power plants. The STOXX ESG-X family was developed based on the feedback of European asset owners, and this important screening is a very relevant feature as investors look more closely at their climate-related risks,” said Willem Keogh, Head of ESG and Thematic Solutions at Qontigo.
“Because we were looking for tradeable benchmark indices which are compliant with our responsible investment policy, we were involved in the development of the ESG-X index family and were among the first to trade Eurex futures on the STOXX Europe 600 ESG-X Index. Liquidity is of the greatest importance and we are therefore very happy that the ESG-X range on Eurex is being extended with a future on the STOXX USA 500 ESG-X Index,” said Magnus Linder, Head of Derivatives at Swedbank Robur, one of Scandinavia’s largest asset managers.
“ESG derivatives have a huge potential for the mainstreaming of sustainable investing as they give our clients the ability to hedge and take positions while using fully compliant, sustainable trading instruments,” said Paul Vivier, BNP Paribas, senior trader. “We fully support the launch of this new future as liquidity will drive ESG derivatives growth.”
Michael Peters, Member of the Eurex Executive Board, said: “Driven by the growth of ESG assets, the strong demand from both retail and institutional investors, and the overall dynamics of the market, we want to give our clients maximum flexibility when it comes to selecting their ESG investment approaches.”
The ESG-X index family is based on involvement screening for controversial weapons, tobacco and thermal coal as well as a norm-based screening that follows the United Nations Global Compact principles of human and labor rights, the environment, business ethics and anti-corruption. STOXX cooperates with the ESG data provider Sustainalytics for the screening. The STOXX USA 500 ESG-X uses a free-float market cap weighting similar to its parent index. It is easy to implement as a benchmark for asset owners and well-suited to serve as an underlying for ETFs, derivatives or structured products.
New futures using MSCI ESG Screened Indexes to be launched in March 2020 / covering USA, World, EM, EAFE and Japan
The global derivatives exchange Eurex will expand its ESG equity index-linked product suite during the first quarter of 2020. With the introduction of derivatives on sustainable versions of various regional and global benchmarks, Eurex will achieve global coverage with its ESG offering.
— Eurex (@EurexGroup) December 5, 2019
The new products are planned to be introduced on 2 March 2020, well ahead of the quarterly roll. The products will use MSCI’s ESG screened index suite, covering USA, World, EM, EAFE and Japan.
Michael Peters, Member of the Eurex Executive Board: “Driven by the growth of ESG assets, the strong demand from both retail and institutional investors, and the overall dynamics of the market, we want to give our clients maximum flexibility when it comes to selecting their ESG investment approaches.”
George Harrington, Global Head of Futures and Options Licensing at MSCI: “We are excited to continue to build our strategic relationship with Eurex in relation to this diverse and innovative range of ESG indexes.”
The new product launches mark the next step in Eurex’s ESG strategy. Eurex started in February 2019 with the introduction of the first European ESG derivatives product suite, a segment that has traded nearly half a million contracts so far this year.
The new product announcement comes after Eurex and MSCI recently agreed on a long-term extension of their strategic relationship that includes new licenses for Eurex’s listed ESG equity index derivatives. Depending on the market’s needs, the exchange will look into further products and additional ESG methodologies to be introduced in 2020.
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