Apr 25, 2017
Eurex
Introduction of seven new options on iShares ETFs
Since 2015, Eurex has cooperated with both liquidity providers and ETF issuers to facilitate trading and hedging activities for, among others, ETF asset holders using options on ETFs. Liquidity has attracted further institutional interest, and in 2016, with nearly 300,000 traded contracts, Eurex recorded a sevenfold increase in ETF options volume.
The underlying ETF market continues to demonstrate robust growth, driven by strong institutional participation. Global ETP assets have reached USD 3.5 trillion in 2016, and are expected to exceed USD 6 trillion by 2020. Europe is the #2 region in terms of AUM with USD 565bn; a 16% market share.
ETF options listed at Eurex add derivative tools for the end user portfolio. They attract increasing institutional, as well as, private investors and contribute to the development of a healthy ETF ecosystem in Europe.
The key difference between ETF options and index options is the physical delivery of the underlying in case of exercise or assignment. Therefore, investors gain exposure not only to the performance of the underlying index, i.e. the EURO STOXX 50® or DAX®, but specifically to the underlying ETF itself. This allows investors to implement option strategies on existing ETF positions by referencing their exact underlying without the execution and basis risk associated with utilising index options as an alternative.
To meet the increasing investor demand, Eurex introduces seven new underlying ETF options. The offering expands to European underlying indexes with ETFs on STOXX® Europe 600, MSCI Europe and also to the iShares S&P500, as well as, the iShares FTSE 100. This allows investors to trade options on their U.S. and U.K. ETF exposures on a regulated European derivatives market, with UCITS compliant instruments, during European trading hours with the transparency and benefit of centrally cleared on-exchange listed products.
Our relaunched ETF option segment will subsequently cover underlyings with a combined 90bn in assets (over 15% of the European AUM).
Our new iShares ETF Options at a glance
