Eurex, Europe’s largest derivatives exchange, will offer futures trading based on long-term French bonds, allowing customers to hedge positions in government debt.
The derivatives contracts will start trading on April 16, according to an e-mailed statement from Frankfurt-based Deutsche Boerse AG (DB1), which owns Eurex. The so-called Euro OAT future will join Eurex’s benchmark contracts based on German and Italian government securities.
“With the introduction of this new contract we are responding to the great interest shown among market participants in more customized hedging solutions,” Mehtap Dinc, head of product development at Eurex, said in the statement. Dealers including Barclays Plc and Morgan Stanley showed interest in making markets, Eurex said, meaning they would provide bids and offers for trading the product.
The new contracts are structured similarly to bund futures, Eurex said. They may be settled using bonds due in 8 1/2 years to 10 1/2 years with a maximum maturity of 17 years when they were sold, according to the statement. The notional coupon will be 6 percent and the contract value 100,000 euros ($132,060).
The minimum price movement will be 0.01 percent, similar to the so-called tick sizes of bund futures and Italian bond futures, the exchange said. Trading hours will run from 8 a.m. to 7 p.m. Frankfurt time.
The exchange is offering new products even as Deutsche Boerse sued to contest the European Union’s rejection of its takeover of NYSE Euronext (NYX), a move aimed at settling the issue of how regulators define the size of the region’s derivatives market. Authorities blocked the takeover on grounds that it would create a “near monopoly,” uniting Eurex and NYSE’s Liffe, the region’s second-largest derivatives market.
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