Intercontinental Exchange, Inc. (NYSE:ICE) today announced the launch of Long European Union (EU) Bond Index futures along with the first trades in the contract.
The cash-settled futures contract references the ICE 8-13 Year European Union Index (Ticker: G0EU8T13) which tracks the performance of long-term debt issued by the EU.
The Index is produced by ICE Data Indices (IDI), a recognized third country benchmark administrator under the U.K. Benchmarks Regulation. The ICE 8-13 Year European Union Index is a subset of the ICE European Union Index, including all securities with a remaining term to final maturity greater than or equal to 8 years and less than 13 years. The Index tracks exposure to a specific point on the EU curve and the historical volatility of the Index is similar to other European Bond futures.
“Harmonized EU debt is an emerging space and as it scales, market participants need a futures hedging tool to help them manage risk,” said Caterina Caramaschi, Vice President, Financial Derivatives at ICE. “By introducing an equity-style index-based instrument that is cash-settled, ICE is opening up EU debt to a potentially larger pool of liquidity.”
“With the interest and debate around the status of European Union bonds not being included in sovereign bond indices, we saw that customers wanted a way to invest in, and manage, exposure to EU debt,” said Varun Pawar, Chief Product Officer of ICE Fixed Income and Data Services. “By leveraging ICE’s leading fixed income pricing and reference data, IDI’s index construction capabilities, and ICE’s global futures team, we have created a product that allows customers to manage this risk, demonstrating the product innovation we can bring to customers across global financial markets.”
The contract is available to trade and clear alongside ICE’s deeply liquid, multi-currency European, U.K. and Swiss interest rate markets, including benchmarks Euribor, €STR, SONIA and SARON as well as Gilts, the benchmark for the U.K. government bond yield curve. Open interest is up over 20% year-over-year across ICE’s interest rate derivatives complex.
