EEX wants to round off the product portfolio in the futures market with three-month futures before the year is out. The simulation for the new products will start on November 8, as EEX announced. When the three-month futures are launched, settlement will take place in the form of so-called cascading for the first time: Unlike the one-month futures, which are settled directly in cash, three-month and 12-month futures are initially replaced by other futures. On the last day of trading in the respective contract, three-month (quarter-end) futures break down into three one-month futures, which together correspond to the delivery quarter. They are then cash-settled again.
The same pattern applies for cascading in the 12-month futures, which are replaced on the last day of trading by three one-month futures and three three-month (quarter-end) futures; the three-month futures in turn break down on the last day of trading into three one-month futures. These, too, are then ultimately cash-settled. With cascading, a position is divided into standardized products which, for their part, are tradable in the liquid market. The cascading enables the trading participants to trade standardized products during the delivery periods of the longer-term products.
