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Equity Index Highlights - May 2018 edition

Release date: 16 May 2018 | Eurex Exchange

Equity Index Highlights - May 2018 edition

Market briefing

The equity market correction triggered in February that brought volatility has faded as global equity markets made gains in April. The oil & gas sector has led these gains as crude oil prices increased. The positive performance of the Bloomberg Commodity Index in April was similarly driven by this energy component as geopolitical concerns around the Iran nuclear deal escalated. Eurex offers derivatives contracts on the Bloomberg Commodity Indexes to offer members a listed product to hedge such risks. Other sources of potential volatility such as fears over a global trade war appear to have been pushed to the sidelines for now which has been further supportive to equity markets: but for how long is the question at the front of many investors' minds.

Year-on-year volumes for DAX®, Mini-DAX® and STOXX® Europe 600 Futures show strong growth. Here, a likely driver for future client activity will be communication from the ECB around reduction and timing of the withdrawal from quantitative easing measures in 2018. This may be impacted by developments within the Italian political scene given the size of the government bond market there, which has been a major beneficiary from the asset purchase programmes.

Whilst European and U.S. equity markets returned to positive monthly performance, emerging markets struggled in April. Looking deeper into the broad MSCI EM Index, we saw negative returns for South Africa and Russia, but positive returns for Columbia. Eurex lists MSCI index futures for all three countries plus many more enabling investors to execute long / short strategies on a transparent, liquid and centrally cleared venue.

The main dividend season in Europe kicked off in April and runs until mid-June. This coincided with robust volumes in our EURO STOXX® 50 Index Dividend Futures and Options, which have markets listed out to December 2027, enabling clients to express investment views over a long-term horizon. The Total Return Futures have equally benefitted from client interest as member participation increases in equity repo trading via this innovative listed solution. 

Zubin Ramdarshan, Head of Equity and Index Product Research & Development

Facts & figures

Product news

Achievements are nothing new to Eurex' Total Return Futures (TRF) on the EURO STOXX 50® Index. Only three months after their launch in December 2016 their traded notional value already exceeded EUR one billion. Now, a little more than one year on, they have reached another important marker: 1 million traded contracts on 3 May, which is equivalent to EUR 35 billion. We spoke to Markus-Alexander Flesch, Global Head Equity & Index Sales at Eurex, about the reasons for the success. Read more

Are you trying to figure out how it's all going to play out on the South Korean market on 30 April after North Korean historic call for peace? Eurex has got the solution for you!

The Eurex/KRX Link, established in 2010, offers both KOSPI 200 Options (OKS2) and Mini-KOSPI 200 Futures (FMK2) for trading on Eurex Exchange during European and U.S. trading hours. The products are fully fungible, meaning positions are traded during the course of a day on two different exchanges and netted at the beginning of the following trading day on KRX. Currently, over 150,000 KOSPI 200 Options and around 250 Mini-KOSPI 200 Futures are traded on average per day on Eurex. YTD 12.7 million contracts has been traded for Eurex KOSPI Options. Six Market Makers are providing quotes ensuring liquid products for Korean as well as international investors. In Eurex KOSPI 200 Options the daily record trading volume in 2018 was 683,729 contracts on 7 February.

Russia continues to be one of the most attractive emerging markets with relative low valuations and growing derivatives market. RDX® USD Index is well established in the financial market and comprise the most liquid Russian ADRs/GDRs traded at the London Stock Exchange. Eurex launched RDX index options and futures in March 2012.

Volume and open interest started to grow again. We have witnessed growth in client demand for Eurex RDX® USD Futures and Options. The Open Interest for FRDX in April 2018 registered 41,139 contracts and for ORDX 189,045 contracts.

Participants trade off-book flexible contracts regularly. The total traded contract volume since launch was 4.7 million contracts for FRDX and 4.8 million contracts for ORDX at the end of April 2018.

The RDX® USD Index is the most traded Russian DR index in the interbank market, especially high is the number of structured products based on RDX® USD Index.

Eurex RDX® USD derivatives - Your base for structured products. Learn more

The current economic and political situation in Europe raises a number of questions. We talked to Sylvain Broyer, Head of Economics at French investment bank Natixis, about the likelihood of another financial crisis and some key issues investors should keep an eye on. Read more

MiFID II and the associated compliance has been a catalyst for change as new rules are causing a shift in the way global market participants assess and track their executions. The ability to preserve key elements of the OTC trading workflow while leveraging the benefits of electronic price formation is becoming more and more important.

TABB Group published an interesting market note on the innovative Selective RFQ approach, stating Eurex EnLight as a prime example of merging the old and the new trading paradigms.

The market note series consist of three parts. In part one, you can find out more about the reasons leading to innovative approaches like Selective RFQ.

This year's annual Derivatives Forum will focus on the key issues that will shape the derivatives industry of the future - including product innovation across asset classes, fintech, and geopolitical issues such as Brexit - and assess how ready market participants are to face the challenges and opportunities that lie ahead. Registration for Paris and Amsterdam will open shortly.

To learn more about our products and services, please do not hesitate to contact your local Sales representative, visit our website or follow us on Twitter @eurexgroup and LinkedIn.


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