Nasdaq OMX has partnered with custodian bank BNY Mellon to introduce new derivatives based on US treasury securities, which it claims will help investors hedge interest rates more efficiently.
The new options contracts will be based on 10-year notes and 30-year bonds and traded on Nasdaq OMX’s PHLX market from 19 February.
According to the market operator, offering derivatives based on US treasury securities gives investors a way of hedging risk with more precision, using an ‘on the run’ convention.
“Ten-year notes and thirty-year bonds are the most heavily traded securities within the fixed income market and listing options on US treasuries on our exchange will bring direct market access to global investors,” said Eric Noll, executive vice president of transaction services US and UK at Nasdaq OMX. “It is mission critical for Nasdaq OMX to offer our member firms opportunities within new asset classes and new structures that improve market quality. This partnership will provide investors with an additional level of transparency, deeper liquidity and improved execution efficiency to this new asset class.”
Nasdaq OMX says it will continue to work with BNY Mellon to develop products that are specifically suited to those that run fixed income portfolios.
“Collaborating with Nasdaq OMX was the perfect way for us to leverage our experience and expertise, applying to this important asset class our focus on developing innovative solutions that contribute to our clients’ success,” said Scott Posner, executive vice president and business executive for BNY Mellon’s Strategic Growth Initiatives group. “By leveraging the strengths of our two organisations, we can bring the benefits of exchange trading – increased precision in hedging, central clearing, improved transparency and many others, to markets that have previously traded over the counter.”