Dual Issuer Base for MATIF Euro Notional and Euro 5-year Contracts

Deliverable securities for the June 99 and September 99 deliveries of the Euro Notional future and the June 99 delivery of the Euro 5-year contract which will begin trading on February 5, 1999 will include both French and German issues. No single sovereign issuer in the euro zone offers a sufficient stock of debt to properly represent the euro bond market as a whole. Thus only ten German issues amount to over EUR 10 billion, compared with 21 French government issues. Total German government debt accounts for only a little over 25% of all sovereign debt in the euro zone. The dual-issuer Euro Notional contract will be based on underlying assets amounting to EUR 100 billion compared with EUR 50 billion for the June 1999 delivery of the bond contract. The broader base will significantly reduce the risk of a squeeze at a time when trading and open interest are likely to rise rapidly to meet the growing needs of participants. The inclusion of other sovereign issues will be considered case by case with the assistance of Matif's Expert Committee. Criteria will include in particular yield convergence and relative liquidity.