The EXTF futures at Eurex are settled by physical delivery and differ in that respect from the existing Eurex index futures. Moreover, the contract size is well designed, which also makes them attractive for participants with smaller risk positions. The EXTF options are besides its size designed along the same lines as the existing Eurex equity options. The derivatives exchange also pointed out that international trading firms will conduct active market making for the new products from the start to provide for order-book liquidity. Market makers will quote a minimum number of binding bid and ask prices within maximum spreads. The new products will be available for trading at Eurex from 9:00 a.m. to 8:00 p.m. (CET).
Futures and options on ETFs offer tailormade hedging opportunities for the underlying exchange-traded funds, Eurex said. The EXTF derivatives are innovative risk-management tools that enable Eurex customers to fine-tune their risks in the new growth market of exchange-traded index fund shares. EXTF futures and options are an ideal complement to the existing index derivatives segment at Eurex and a logical and consequent extension of one of the most successful financial innovations in recent years, it said.
Deutsche Börse, which in addition to SWX Swiss Exchange is a parent company of Eurex, was the first European exchange to launch a segment for exchange-traded funds in April 2000. In the meantime, the XTF segment has established its position as the leading market segment for exchange-traded funds in Europe. There are currently 63 index funds and 16 actively managed equity funds listed in the XTF segment, and 98 percent of the turnover in these fund products in Germany is posted through Xetra, the leading European trading system in the cash market. SWX has been offering a corresponding Swiss ETF segment since March 2001.
