Euronext has launched options contracts based on six Blackrock-managed iShares ETFs on its Amsterdam platform, in a bid to bolster its equity derivatives offerings.
The European exchange operator saw strong trading activity during December 2014, with equity and index derivatives volumes both up 16% compared to the same period in the previous year. Euronext also posted its highest daily trading volumes on 16 December with 1.55 million contracts traded.
The launch of the options contracts on ETFs comes as Euronext looks to build out its standalone derivatives business after splitting with former owner NYSE – now part of ICE Group – last year.
The contracts are aimed at both institutional and retail investors as an alternative way of investing in broad indices using an options contract.
“We’re putting a lot more focus on the equity derivatives franchise as it also helps to boost activity in the cash market,” Adam Rose, Euronext’s head of financial derivatives, told The TRADE Derivatives magazine in December.
“A pretty wide array of market participants are using equity derivatives but the biggest is institutional investors,” said Rose. “They’re having to deal with low volumes and low yields so they’re looking to equity derivatives as a way of delivering greater returns and enhanced yield without introducing additional risk.”
The launch is backed by Blackrock and asset manager Theodoor Gillissen, along with global quantitative trading firm Susquehanna which will act as liquidity provider.
The first ETF options contracts will be launched on iShares MSCI Emerging Markets UCITS ETF, iShares EURO STOXX 50 UCITS ETF, iShares MSCI Europe UCITS ETF,iSharesS&P 500 UCITS ETF, iShares MSCI World UCITS ETF and iShares MSCI Japan EUR Hedged UCITS ETF.
ETFs have been on the rise in both US and European markets in recent years, and a recent regulation change in the Netherlands has seen the abolition of distribution fees, therefore further increasing interest in the products.
Over the last year, trading in ETFs on Euronext Amsterdam increased by 40%, according to the exchange.