Nasdaq OMX Group Inc., the second-biggest U.S. exchange operator, will offer options on U.S. Treasury securities to allow buyers to hedge interest-rate risk.
Trading of options for 10- and 30-year securities will begin Feb. 19 on the company’s Philadelphia-based Nasdaq OMX PHLX exchange. The contracts, which provide the right, but not the obligation to buy or sell a set amount of a security within a predetermined time, will be settled for a specific Treasury and have a $10,000 face value, according to details on the New York-based Nasdaq’s website.
Nasdaq’s options will compete with those from the Chicago-based CME Group Inc., which reported a record 1.17 million options on Treasury futures contract traded on Feb. 1. The Bank of New York Mellon Corp., the world’s largest custody bank, is working with Nasdaq to offer the options.