ASX today commenced trading of S&P/ASX 200 VIX futures, a new exchange- traded product that allows users to trade, hedge and arbitrage anticipated volatility in the Australian equity market.
The new S&P/ASX 200 VIX futures will allow market participants to trade anticipated changes in volatility in a single transaction and in a manner independent of the factors that normally complicate volatility strategies, such as expiring options and price movements in the underlying market.
The S&P/ASX 200 VIX index (A-VIX), Australia’s equity market volatility benchmark, will be the underlying index for the new futures contract. S&P/ASX 200 VIX futures will allow users to isolate local equity market volatility and avoid the timing, currency and matching risk incurred when using volatility products based on offshore indices.
ASX Deputy CEO Peter Hiom said: “ASX is committed to providing new products to meet the changing needs of the market. One of those needs is the ability to trade in volatility as an asset class in its own right. S&P/ASX 200 VIX futures will provide users with the opportunity to more easily and efficiently hedge their investment portfolios against volatility, while also providing new trading opportunities.”
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