28 May 2015
Growth in Eurex Sector Derivatives shows investors' need for focus
Sector index derivatives are extremely convenient, easy to implement, exchange-traded and regulated products that deliver exposure to price movements of entire sector indexes with one single futures or options contract. They are also intelligent risk management instruments designed to fine-tune the risk in portfolios and thus provide for maximum added value to its customers. The high demand from market participants for sector index products stems from the increasing use of trading strategies that are focused on individual sectors. Eurex Exchange is the global leader for sector-based products.
A testament to their growing popularity, over 40 million sector index futures and options contracts were traded at Eurex Exchange in 2014. That’s a 59 percent increase in volume year-on-year. Average daily trading volume was 165,000 contracts during 2014.
Pioneers in the sector
In fact, sector index derivatives are one of the fastest growing segments on Eurex Exchange. The high demand for sector products further increased in the first quarter of 2015. Almost 220,000 options and futures contracts are currently traded every day on Eurex Exchange.
We cover 38 EURO STOXX® and STOXX® 600 Sector Indexes as well as five sector dividend derivatives. Dividend futures on EURO STOXX® and STOXX® Europe 600 Sector Indexes, which went live in March 2012, made the dividends on the sectors banks, insurance, oil & gas, telecommunications and utilities available for trading for the first time anywhere in the world.
Investors recognize the many benefits of exchange-traded sector futures and options, among which are:
Diversification
Ability to fine-tune portfolios
Increase in maneuverability
Combination of off-book and order book trading
Transparent pricing via vendors like Bloomberg and Reuters
Central clearing
Greater operational efficiencies
Flexible Contracts & Eurex Trade Entry Services
Customer flow
Agency, or client order flow accounts for more than 45 percent of the overall trading volume. All in all, more than 115 Trading Participants are currently active in sector derivatives.
Crisis and regulation driving top performer
Our top performing sector product, the EURO STOXX® Banks Futures (Eurex Product ID FESB), is a clear example of how the financial crisis and the resulting regulatory changes are driving volume growth. As banks continue to evolve in the current economic and regulatory framework, this sector remains an investor favorit.
The EURO STOXX® Banks Futures featured an increase in turnover of nearly +100 percent in 2014. With an average daily volume of 102,779 contracts in 2015, it ranks amongst the top three equity index futures at Eurex Exchange. Open interest is also strong. With 416,087 contracts, the EURO STOXX® Banks Futures ranks on the second place in the ranking of equity index futures – directly following the EURO STOXX 50® Index Futures.
Volume in EURO STOXX® Banks Futures since inception
Our STOXX® Europe 600 Oil & Gas Futures (FSTE) is another popular product given the importance of, and strong trends within, energy markets. Average daily volume in 2015 is approximately 4,400 contracts.
Clear benefits
In light of global regulatory developments, the fact that our sector products are cleared by Eurex Clearing, Europe’s leading clearing house, is another compelling argument for asset managers to use them as risk management tools.
Many of these managers are turning to our sector futures and options to benefit as well from our portfolio-based margin approach. Trading sector futures and options can help investors achieve greater collateral efficiencies within their listed businesses and across their listed and OTC businesses.
Ready for developments in any sector
Eurex Exchange features one of the world’s most extensive product ranges, which spans nine asset classes. Our broad offering of equity index products, which includes futures and options on all major sectors of the European economy, means that as market trends take shape, investors get on-demand access all of our hedging tools – on one convenient platform – just as soon as they need it.
For more information on Eurex Exchange sector derivatives, visit our website or contact us.
Contact
Christine Heyde , T +49-69-211-1 56 98 or via e-mail: christine.heyde@eurexchange.com
Nicolas von Kageneck , T +33 1 55 27 67 76 or via e-mail: nicolas.kageneck@eurexchange.com
