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"Record volumes across the board."

Release date: 04 Jun 2018 | Eurex Exchange, Eurex Clearing

"Record volumes across the board."

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Lee Bartholomew, Eurex’ Head of Fixed Income & FX Product Research and Development

The current political situation in Italy keeps the markets busy. Lee Bartholomew, Head of Fixed Income & FX Product Research and Development at Eurex, discusses recent developments in Eurex’ interest rate markets.

Lee, from a fixed income perspective, what were the most interesting contracts in May?

The Italian BTP segment has seen record volumes across the board, both in terms of open interest and traded volumes. I expect this to continue as the new balance of power in the Italian parliament promises further uncertainty for end investors and the markets. Having said this, the pickup in realized volatility has seen volumes in all of Eurex’s fixed income products reach record levels. What is encouraging is the breadth of volume increase in BTP both in futures and options. Having this breadth of product coverage has allowed investors to hedge and position their portfolio’s accordingly. All this wouldn’t have been possible without the support of our members, who have provided liquidity in choppy markets.

Could you describe the Eurex BTP offering in a bit more detail?

Eurex offers the full suite of Exchange Traded Derivatives (ETD), both in futures and options. With respect to futures, we have seen record volumes both in the short-term contract and the 10y. In 2017, we launched options on the 10y futures with the support of a few key liquidity providers (LP) and the volumes have been consistently increasing month on month to an average daily volume of 4,000 contracts. By providing our members access to alternative instruments away from the over-the-counter (OTC) markets, Eurex has been able to offer investors access to liquidity to position their portfolios.

Besides BTP, what other European sovereigns are currently in the focus of investors?

Implied volatility has been low across most asset classes, which suggests that the recent geopolitical risks were being underpriced. Having said that, Eurex has seen a broad-based increase in volumes in our fixed income segment. The recent spike in volatility saw stops triggered in options and futures. What has been encouraging is, that despite the moves, Eurex has been able to provide investors with liquid markets which has not always been replicated in the OTC and cash markets. In short, the fallout in emerging markets, together with the heightened sensitivity in Italy has helped to underpin Eurex’s volumes. 

 

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