Equity Index market briefing January 2021

Throughout the year, from speaking to our members and clients, there has always been a collective optimism that we will soon be able to forget the stresses of 2020 and look forward to a more normal market environment. But, before we consign 2020 to the history books, a brief reminder of the successful Eurex product launches from the past twelve months. Both MSCI Emerging Markets ESG screened and MSCI Kuwait futures attracted good interest. This was to a backdrop of solid MSCI volumes overall for regional futures such as EM Asia, World, Europe, ACWI, EM Latam and Pacific as well as the MSCI country futures of Japan, Saudi Arabia, Qatar, Canada, China Free, Australia, Mexico, Taiwan, India, Thailand, Russia, USA, Indonesia, Malaysia and Philippines. The comprehensive suite of interconnected MSCI derivative building blocks seems to offer the market what it requires in terms of breadth of choice. The corresponding portfolio margin benefits, combined with the extended trading hours, contributed to the keen demand to trade MSCI derivatives at Eurex.

Introducing several new derivatives contracts to our ESG segment, initially founded on the STOXX Europe 600® futures and options, added to the segment's success. There were early trading prints in the DAX 50 ESG and EURO STOXX 50® ESG futures among this segment. Naturally, for a year characterized by turbulence, there was a flight-to-liquidity as clients turned towards the highly tradable benchmarks on Eurex: EURO STOXX 50®, Banks sector, STOXX® Europe 600, mini-DAX and SMI all experienced higher than usual levels of activity. The adjacent dividend and equity repo markets were also in focus as dividend payment uncertainty remained a theme during the year, leading to strong participation in both the Total Return Futures and Index Dividend futures based on the EURO STOXX 50®.

Aside from product launches, we implemented several liquidity measures aimed at growing order book depth and liquidity. These ranged from targeted tick size recalibrations, revisions to minimum block trade sizes and liquidity provider scheme updates. The crucial element to a robust order book liquidity picture is the consistent passive quotes streamed by our members. Here, we acknowledge and are highly appreciative of their capabilities demonstrated during several volatile sessions to absorb and risk manage extraordinarily high volumes. As we already find ourselves in 2021, clients can again look forward to exciting new plans to launch products and other enhancements to improve client experience when interacting with our markets.

Zubin Ramdarshan, Head of Equity & Index Product Design, Eurex