Euronext will launch a suite of single stock dividend futures in Q1 next year, joining a handful of other exchanges in listing the increasingly popular derivatives product surfacing in Europe.
The offering will initially cover CAC 40 Index components before expanding into the most liquid stocks on its Amsterdam, Brussels, Lisbon and Paris markets.
Euronext joins European exchange counterparts Eurex, Liffe and Borsa Italiana in listing dividend futures, a product which theTRADEnews.com highlighted in a recent feature on innovation in exchange-traded derivatives.
“This is another great example of several new growth initiatives we are rolling out across the Euronext equity derivatives sector, to broaden the range of products we offer to our diverse client base,” said Adam Rose, head of financial derivatives at Euronext.
Dividend futures have been gradually rising in popularity among the buy-side since the financial crisis, gaining pace rapidly on their OTC equivalents.
The products were being used mainly by banks’ prop desks, private banks and hedge funds, before a limited but growing number asset management companies adopted them too.
“In a nutshell, today, the dividend futures market offers all the characteristics a young and growing market should have in order to attract buy-side investors,” said Erwan Tigreat, business development manager at dividend futures specialist hedge fund Melanion Capital, earlier this year.
“Index dividend futures are attractive to large players as they can be used to add on, or mitigate, important exposure very quickly. Single-stock dividend futures appeal to different players with specific exposure to individual companies. As such they have helped broaden the spectrum of participants in this market.”