ParisBourseSBF SA and Merrill Lynch Join Forces to Launch the First Euro Bond Index Derivatives

ParisBourseSBF SA and Merrill Lynch Pierce Fenner & Smith Inc. have signed an agreement for the joint development of a range of bond-index futures to be traded on the French exchange's electronic system, NSC. Merrill Lynch and ParisBourseSBF SA, as index providers, will calculate and disseminate the underlying indices. These indices will consist of baskets of securities selected from, and designed to closely match the performance of several of Merrill Lynch's previously introduced Euro Broad Market indices, which in turn measure the performance of key sectors of the euro-denominated bond market. The selection process will be in accordance with clearly stated criteria. ParisBourseSBF SA will first launch two futures in September, with one based on the Euro-sovereign index (sovereign risk) and the other on the Euro Non Financial Corporate index (industrial and commercial issues debt). The range of futures will later be rounded out with contracts on the Euro Financial Corporate Index (banking and finance sector) and futures on European High Yield index. The innovative products will offer investors entirely new tools for managing credit risk. "Their transparent methodology and commitment to the highest professional standards make Merrill Lynch the ideal partner for the development of derivatives allowing investors to manage the risk exposure on government bonds, spread paper and high-yield issues in the euro zone. The indices we will develop together can be replicated and provide quality underlying assets for our derivative contracts" said Pascal Samaran, Deputy Chief Executive Officer, Markets and products, at ParisBourseSBF SA. "Exchange traded bond-index contracts, offered by ParisBourseSBF SA will, for the first time, provide investors with an efficient vehicle with which to manage both interest rate and credit exposure in their portfolios. This becomes increasingly important as more and more funds adopt newer, broad-based indices as their performance benchmarks" said Philip Galdi, Managing Director, quantitative analysis and portfolio strategy.