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Eurex enhances European ETF ecosystem with new product

Release date: 09 Dec 2019 | Eurex Exchange

Eurex enhances European ETF ecosystem with new product

First exchange to offer EUR fixed income ETF options

Eurex – part of Deutsche Börse Group – will extend its pioneering role in ETF derivatives. To further support the financial industry in hedging their portfolios, Europe’s leading derivatives exchange will be the first to launch EUR-denominated fixed income ETF options on 9 December.

The two underlying ETFs – iShares EUR High Yield Corporate Bond ETF (IHYG LN) and iShares Core EUR Corporate Bond ETF (IEAC LN) – are among the largest corporate bond ETFs in Europe. Options on these UCITS-compliant ETFs offer investors further optionality to hedge or gain exposure to European investment grade and high yield credit indexes.

The launch is expected to be well supported as Eurex responds to strong end client demand from across the institutional investor base both in Europe and globally. Brett Olson, Head of iShares Fixed Income ETFs (EMEA) at BlackRock said: “We are seeing a virtuous cycle of demand for European bond ETFs developing as more investors become comfortable with the breadth and depth of liquidity in the market, and these options represent another critical milestone. It is the first time that investors will have access to options on Euro investment grade and high yield ETFs worldwide which provide access to a new tool that is more representative of cash bond markets for hedging risks and taking tactical positions.”

Lee Bartholomew, Head of Fixed Income ETD Product Design at Eurex: “We are excited by this product launch as we feel that this is an ever-growing, important segment which we are committed to developing at Eurex. We believe we are well positioned to do this, giving clients access to a developing liquidity pool and offering a listed alternative that replicates OTC risk profiles.”

The European market for corporate bonds plays a key role in the financial ecosystem. It has grown consistently since the financial crisis, both in terms of market participants as well as overall assets under management. Eurex listed USD fixed income ETF options in 2017 and volumes have continued to grow. A number of new clients joining the market propelled volume to over 200,000 contracts year-to-date 2019, a fivefold increase versus 2018. 

Three major banks will provide liquidity for Eurex’s options on EUR fixed income ETFs.

Media contact:
Irmgard Thiessen