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Market briefing
Global equity markets generally drifted for most of July before finishing weakly. The focus recently has been towards the extraordinary fixed income landscape that sees new records on the notional of negative yielding debt. This not only spans government debt and investment grade credit but also some corners of the ‘high-yield’ universe. It’s clear irony, but also a worrying distortion brought about by years of accommodative central bank policy.
All this has led to a certain mistrust of conventional investment markets and a spike in year-on-year demand for derivative hedging. We saw significant increases in volumes across all our benchmark derivative products: EURO STOXX 50®, Banks sector, DAX® and mini-DAX®, VSTOXX® and the SMI®. We also introduced Stock Tracking Futures on the largest 50 European blue-chips, a product designed for clients looking to extract the pure equity performance by adjusting for dividends. And, for our heavily traded Banks sector futures, we reduced the calendar tick size. The purpose here is to reduce the costs for open interest holders who roll passively.
Looking ahead, there are once again some red flags in alternative asset classes: gold is at multi-year highs, bitcoin has enjoyed a strong bounce off the bottom and equity markets feel as fragile as ever to any negative Presidential tweets! In this current environment we can expect demand for derivative hedging on Eurex to remain elevated.
Zubin Ramdarshan, Head of Equity & Index Product Design, Eurex
Facts & figures
News
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Ticking the box: tick size reduction for futures calendar spreads for EURO STOXX®/STOXX® Europe 600-Banks Futures
On 22 July 2019 Eurex will reduce the tick size for standardized futures strategies (futures calendar spreads) for the EURO STOXX®/STOXX® Europe 600-Banks Futures (FESB/FSTB). We spoke to Zubin Ramdarshan, head of Equity & Index Product Design at Eurex, about the planned change.
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