Eurex, the derivatives market owned by German exchange group Deutsche Börse, has announced plans to add ten new euro-denominated dividend derivatives on its platform from 2 March.
The new instruments will cover dividends from selected sector indices, including the EURO STOXX, and banking, insurance, oil & gas, telecommunications and utilities sectors from the STOXX Europe 600. STOXX is the index provider also owned by Deutsche Börse.
According to Eurex, a consultation with market participants revealed most demand for the selected instruments.
The new futures will be settled in cash and tradable from 08.30 to 17.30 CET. Eurex will also offer a market making incentive scheme with the aim of building up liquidity in the new instruments from the start.
Eurex first began offering dividend-based derivatives in June 2008. According to the exchange’s own figures, 23,000 contracts were traded daily in 2011, rising to 26,000 in January 2012. Open interest in Eurex dividend futures stands at around €13 billion.
Exchanges have sought to build up the types of derivatives they offer following the impending launch of the European market infrastructure regulation, new rules that will bring OTC derivatives on exchange so they can be centrally-cleared. Eurex already offers central clearing services for bilateral trading via its block trading OTC trade entry facility.
The addition of dividend futures on Eurex follows the bourse’s planned launch of Russian derivatives contracts based on Vienna’s RDX USD index on 19 March.