A year of FBEU: Marking the first anniversary of the EU Bond Futures

A year has passed since Eurex launched its much-anticipated EU Bond Futures (FBEU). The introduction was a landmark moment for Europe’s fixed income market, further advancing the maturity of the European Union’s bond suite and improving access to the EU debt market for global investors.  

The launch marked a truly collaborative effort across markets. Eurex, the European Commission and dealers active in the EU bond market all saw the market need for FBEU to further develop this market segment. Eurex is grateful to the wide range of market participants that recognized the broader value of a futures contract that references EU bonds and worked with us to bring it to market.

The first year of the FBEU has laid the foundation for long-term success. As the EU bond market continues to mature and regulatory developments such as the SEC's recent proposal to enhance global accessibility, we are confident that the contract will play an increasingly important role in the international fixed income ecosystem.

Matthias Graulich

Chief Commercial Officer and Global Head of Products & Markets at Eurex Group

To recap the development of the underlying market: European government bond markets traditionally feature a mix of sovereign issuers with their respectively unique yield curves. The spread between curves is often wide, translating to differing borrowing costs between member states.  

A unified debt issuance program is therefore seen to reduce fragmentation in Europe’s capital markets and, as a mechanism to lower borrowing costs in the eurozone.  

While the EU has issued bonds for over 40 years, the current growth story began in 2020 with the introduction of the SURE¹ program and NGEU². Since the first issuance of €17 billion EU social bonds in 2020, the total volume of outstanding bonds increased to almost €800 billion. That growth has now made the EU the fifth largest issuer in Europe, a significant achievement in such a short period of time.  

An EU bond futures was recognized from early in the bond program as an essential part of its development and FBEU offers a unique proposition. Underpinned by EU-level debt, it incorporates European-wide fundamentals and risk factors rather than those of any single member state. This makes it a potentially more representative hedging instrument for diversified sovereign bond portfolios: one union, one issuer, and shared fundamentals. 

The ability to easily go long or short the market offers numerous use cases for a broader range of investors spanning from traditional asset managers to hedge funds. FBEU provides the market with a credible tool for hedging and the exchange-traded format also facilitates trading of EU debt for market participants with limited cash bond market access. 

Trading volumes have grown steadily in the year following the launch.  

FBEU was established to help meet the evolving needs of the European fixed income marketplace and bridge a gap in the market with a new and exciting hedging instrument. In due course, we believe the EU bond futures will grow and capture the attention of our client base and expand our footprint in the Sovereign, Supranational, and Agency debt (SSA) space.

Markus Koczian

Senior SSA Trader at Natixis

The product’s appeal goes beyond Europe. FBEU naturally expands the toolkit, for example, for the significant number of Asian investors already familiar with OAT and BTP cash and futures markets.  

Earlier this year Eurex aligned with the SEC to gain clarity when U.S. funds could trade FBEU as a Foreign Security Futures Product. A new announcement of the SEC by the end of August 2026 may allow for full CFTC approval at a later point. 

As other elements of the EU bond ecosystem develop, so will use cases for FBEU. One particularly important factor is the capacity to put on basis trades, supported by the continued growth of the repo market in EU bonds. 

This will attract more hedge fund participation, strengthen futures market liquidity, and increase confidence among real money investors to adopt FBEU as their preferred hedging instrument.

EU Bond futures offer more than just a hedge:  

• Maturing cash and repo markets for EU bonds are complemented by growing liquidity in futures markets.
• EU bond futures notably improve proxy futures hedging results for numerous European issuers versus existing alternatives. 
• Relative value strategies offer opportunities across the cross-section of derivatives (futures/swaps), cash and repo markets 

Happy 1st birthday! 

_{¹ The temporary Support to mitigate Unemployment Risks in an Emergency (SURE) mobilised significant financial means to fight the negative economic and social consequences of the coronavirus outbreak on their territory.} 

_{² NextGenerationEU (NGEU) is boosting Europe’s economy and making our societies stronger and more resilient, delivering tangible results for Europeans through its many projects.}