CME Group to expand offering with launch of 20-Year US Treasury Bond futures

New futures will provide improved efficiency in managing exposure at the 20-year maturity point on the US Treasury curve.

Derivatives marketplace CME Group will expand its benchmark US Treasury futures and options offering to include 20-Year US Treasury Bond futures on 7 March, subject to regulatory review.

According to CME Group, the new futures will allow for delivery of original issue 20-year US Treasury bonds, with remaining terms to maturity at delivery of at least 19 years 2 months and not more than 20 years.

In addition, the new futures will complement CME Group’s existing suite of liquid US Treasury futures and options, which grew over 15% year-over-year last year to a record 4.5 million average daily volume.

CME Group claims that 20-Year US Treasury Bond futures will offer increased efficiency and precision in managing exposure at the 20-year maturity point on the US Treasury curve.

“The introduction of a futures contract on the U.S. Treasury’s 20-Year bond responds directly to market need for a hedging tool at a time when managing US Treasury market risk is more important than ever,” said Agha Mirza, CME Group global head of rates and OTC products.

“Since the US Treasury began issuing 20-Year bonds in May 2020, total issuance has been over $450 billion, creating customer demand for a new product that establishes 20-year yield exposure. As a result, the design of this new contract represents extensive feedback from a wide set of clients and the broader fixed income trading community.” 

Upon launch, the new futures will receive automatic margin offsets against existing interest rate futures, and will be listed with, and subject to, the rules of the Chicago Board of Trade (CBOT). In addition, shortly after launch, these contracts will become eligible for portfolio margining against other cleared interest rate swaps and futures.

In November last year, CME Group announced plans to expand its derivatives offerings with the launch of Micro Ether Futures.

Market participants, through the use of the new Micro Ether Futures, are provided with an efficient way to hedge their spot ether price risk and more easily execute ether trading strategies.