A strong argument for investing in commodities has been the low or even negative correlation to asset classes such as equities and bonds, which made them an interesting and attractive addition to a portfolio. Even if this characteristic became less distinct during the recent financial crisis, there are still compelling reasons that commodities will continue to develop differently based on their individual supply and demand. Furthermore, the positive correlation between commodities and inflation makes them an efficient instrument to protect your portfolio against advances in consumer prices.

Both alternative and traditional money managers have increasingly invested in commodities, resulting in high liquidity in this asset class. We have seen a growing number of commodity-related ETFs and structured products – unsurprisingly, as they tended to outperform the major equity indexes during the last decade, even when taking into account the strong downturn in commodity prices in the second half of 2008. Due to a continuously rising demand in numerous markets, like China and India, the commodities segment is expected to remain a dynamic market on a global scale in the future. In the meantime, commodity derivatives from  agricultures to precious medals and from power to natural gas can be traded.

Apart from the obvious advantage of being able to trade financial and commodity markets on the same platform, you benefit from the transparency that on-exchange trading provides, plus efficient risk reduction provided by Eurex Clearing as central counterparty – a significant advantage over commodity trading in the OTC markets.  At the same time, your margin deposits are handled more efficiently due to the fact that you are not required to deposit margins into various clearing houses.

Eurex Clearing, the leading European clearing house for securities and derivatives transactions, adds value to the commodities market through the clearing of OTC transactions entered into the Eurex^® system via EurexOTC Trade Entry services. You benefit from bilateral trading, straight-through processing and central clearing on a single platform, thereby mitigating counterparty and credit risk.Contract specifications for commodities at Eurex allow for smaller levels of notional exposure, as the standard contract sizes are smaller compared to the commonly traded OTC contracts. Most contracts are cash-settled. This makes them accessible for clients with restrictions in using physically settled products.