ESG Derivatives

11 reasons to trade ESG Derivatives

• Cost efficiency – a liquid and cost-efficient alternative to incorporate ESG into investment strategies and manage undesired sustainability risks
• ESG mandates – flexible solution for asset managers with strict mandates to align with ESG requirements
• Capital efficiency – ESG futures and options are eligible for portfolio margin offsets against other index derivatives, including dividend and volatility derivatives
• Simple, fast integration – standardised Eurex equity index contract specifications for straightforward integration into existing trading infrastructures
• Proven liquidity – liquid derivatives with incentive schemes promote on screen price support.
• Related to successful benchmarks – sustainable versions of established benchmarks such as STOXX Europe 600, MSCI World and MSCI Emerging Markets
• Negative ESG screening or exclusions methodology, reflecting investors’ most common concerns
• Reduced block trade size – facilitates off-book trade entry for institutional investors
• Optimally manage risk of ESG-driven portfolios
• Generate additional alpha – with synthetic exposure to ESG equities
• Exclusions have been selected to span the three pillars of Environmental, Social and Governance (ESG) investing which reflect investors’ most common concerns (thermal coal, tobacco, controversial weapons, in breach of UN Global compact).

Investing with European and US STOXX® ESG index derivatives 

The global evolution in responsible investing entered a new chapter with the launch of Eurex ESG Derivatives on STOXX indices tracking sustainable strategies in Feb 2019.

Overview & Benefits

• Seven STOXX® ESG index futures and options covering five indices
• First European ESG futures on highly liquid benchmark indices for Europe and the Eurozone
• First ESG Derivative covering the U.S. market while excluding thermal coal extraction and coal-fired power plants
• Sustainable index derivatives based on ESG-X, Low Carbon, Climate Impact and Europe ESG Leaders Select 30 Indices
• ESG methodologies covering negative/exclusionary and norms-based screening, positive/best-in-class filtering, climate change scoring
• ESG-X offering - screened version of the well-established pan-European benchmarks
• Unique concept for selecting companies with strong environmental stewardship and forward-looking indicators 
• Low tracking error - Benchmark indices with risk-return profile and reduced tracking error similar to the parent index
• Leading third party ESG data provider (such as Sustainalytics and CDP)

Eurex STOXX ® ESG Derivatives

Global investing with MSCI ESG index derivatives  

With 160 listed MSCI index-based futures, 28 MSCI index-based options and an open interest of around 2.1 million contracts, Eurex is the exchange with the broadest MSCI index-linked offering tradable on one platform and the highest open interest globally. Initially launched in March 2020, 17 MSCI ESG derivatives now complement Eurex’s MSCI derivatives flows.

Overview & Benefits

• Five MSCI ESG Screened Futures: World, EM, EAFE, USA and Japan & Five MSCI Enhanced Focus Futures: World, EM, Europe, USA and Japan
• Four MSCI ESG Screened Options: World, USA, EM and EM Asia 
• Based on liquid global, regional and local MSCI ESG Screened & MSCI Enhanced Focus Indices
• MSCI Enhanced Focus Indices are designed to maximize ESG profile while reducing carbon risk, with financial characteristics similar to Market Cap indexes

Eurex MSCI ESG Screened Derivatives

Eurex MSCI ESG Enhanced Focus CTB Derivatives

DAX^® 50 ESG Futures & Options

Eurex has been the first exchange establishing ESG versions of major European benchmarks

• The product suite offers an hedging alternative to existing benchmarks
• Better performance of ESG also during the COVID19 market turbulence
• Good support by Market Makers and also off book liquidity and prices by Banks as there is an increasing interest and demand in ESG as a general investment approach
• Incorporating ESG means lowering the risk 
• Expanding product suite to the most liquid benchmark(s) incorporating ESG

EURO STOXX 50^® ESG

Eurex has been the first exchange establishing ESG versions of major European benchmarks

• The product suite offers an hedging alternative to existing benchmarks
• Better performance of ESG also during the COVID19 market turbulence
• Good support by Market Makers and also off book liquidity and prices by Banks as there is an increasing interest and demand in ESG as a general investment approach
• Incorporating ESG means lowering the risk 
• Expanding product suite to the most liquid benchmark(s) incorporating ESG

Liquidity Provider (On Screen)

Liquidity Provider (OFF Book / TES)