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Fixed Income Highlights - March 2019 edition

Release date: 14 Mar 2019 | Eurex Exchange

Fixed Income Highlights - March 2019 edition

Market briefing

Equities have been the focal point for the start of the 2019, with many pockets of Fixed Income performing well. Q1/2018 saw a very strong base from which to start the year while, 2019 is proving more of a sanguine start. Month on Month (MoM) we have seen a small uptick in our core markets in both futures and options in February, helped by the futures roll towards the end of the month. The German economy has remained resilient during a tough start to 2019 with economic data surprising slightly to the upside. There are still concerns over how the impact of global trade battles have weighed on Eurozone growth and figures were revised lower. The ECB has downgraded its assessment on the economic outlook, citing that risks are 'to the downside'. In the government bond space, the Bund-BTP spreads have fallen to 253bps, which has helped Eurex's Italian BTP and French OAT. These two segments have performed strongly, with volumes supported by repositioning from fast money accounts and spread moves versus core markets. Implied and realized volatility has remained at or near historical lows, both in our core benchmark products and periphery markets. However, could the market be complacent by not pricing in enough risk premia? Let's see what March brings.

Lee Bartholomew, Head of Fixed Income Product R&D, Eurex
 

Facts & figures

Round-ups of February

Even though banks are much more stable after the financial crisis, the article gives some thought to what makes CCPs in particular so attractive as additional risk-mitigating mechanisms.  

CCP12 Report: Incentives for central clearing and the evolution of OTC derivatives

Eurex Clearing's Teo Floor and Peter Linß speak about the latest report from the global association of CCPs.

First swap transaction for U.S. end clients cleared

Eurex Clearing has cleared its first swap transaction for end clients domiciled in the U.S. after launching a refined legal framework that complies with the LSOC requirements stipulated by the CFTC.

Partnership Program boosts Repo trading at Eurex

Frank Gast, Eurex's Head of Funding & Financing Sales: "Trading and clearing activities have increased well beyond the existing 26 partnership banks. We therefore expect more participants to join the program shortly."

Eurex Repo to act as access to HQLAX blockchain solution

IFollowing extensive testing, the technical set-up as well as legal and regulatory framework of the HQLAX target operating model - an innovative blockchain solution for collateral swaps in the securities lending market - is nearing completion.

Eurex extended trading hours

The Eurex extended trading hours have seen a high participation rate of our Asian and international client base during the first three months after the launch. As of 1 March 2019, the total number of traded contracts during the extended trading hours (Asian hours) has exceeded 1.1 million contracts. Since 10 December 2018 extended trading hours are offered in select liquid futures on Eurex.

Eurex EnLight: Combining off-book liquidity with on-exchange efficiency

Eurex EnLight, the selective RFQ platform, will be taken to the next stage in May 2019 (subject to approval by the Eurex Exchange Council), extending the product suite by adding all equity and equity index options and corresponding futures available on Eurex. The product extension is accompanied by a number of measures:

  • Introduction of a Liquidity Provisioning (LP) building block and related LP rebate differentiation.
  • Differentiation of standard fees for A-Accounts and P/M-Accounts in equity options, equity index options and interest rate options.
  • Differentiation of the Minimum Block Trade Sizes for equity and selected equity index options.


For more information please see Eurex circular 022/19.

Eurex EnLight brings together buying and selling interest from all types of market participants engaged in off-book trading and serves larger scale execution requirements. The platform increases process efficiency, provides liquidity and assists members to comply with MiFID II Best Execution.

Events
 

Register now: Derivatives Forum Frankfurt, 11 April 2019

Impact investing, technological advancements, regulation and geopolitical developments are rapidly changing our industry. We will touch on this paradigm shift at our Derivatives Forum 2019. Topics of discussions are changing market structures, the impact of ESG and the evolution of the European financial markets landscape. Register now to join us in Frankfurt on 11 April!

Meet Eurex at FOW Amsterdam on 21 March!

On 21 March, the FOW returns to Amsterdam for their annual conference. Join us at our booth to catch up! Marcus Addison, Head of Default Management at Eurex Clearing will participate in a panel at 13:45 on the topic "OTC to CCP: What new risks have taken shape?" Don?t miss it.  


Kind regards,
Philip Simons


Eurex Exchange - The home of the euro yield curve


 

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Fixed Income Highlights - March 2019 edition

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