The contract, based on the Interbank Overnight Cash Rate published by the Reserve Bank of Australia, and with Deutsche Bank operating as a market maker, will enable users to hedge against fluctuations in the overnight cash rate and more efficiently manage their daily cash exposures.
"The introduction of the 30 Day Interbank Cash Rate Futures contract is a natural extension of our suite of interest rate products." commented Peter Hiom, General Manager of Business Development. "When combined with our benchmark bond and bank bill futures and options contracts, SFE now provides risk management products across the entire Australian interest rate curve."
In addition to the obvious role of hedging exposures in the physical market, the 30 Day Interbank Cash Rate Futures contract also presents both outright and spread trading opportunities. Specifically the contract can be used for:
- Managing daily cash exposures
- Managing balance sheet mismatches
- Hedging against anticipated fluctuations in the overnight cash rate
- Outright trading on anticipated changes, or lack of changes, in the official cash rate.
- Trading on changes in the shape of the yield curve
- Spread trading against 90 Day Bank Bill Futures
- Income enhancement opportunities for portfolios with cash exposures
- Price transparency and liquidity
- Immediate execution and confirmation
- Centralised clearing
