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CME Group to launch Sovereign Yield Spread futures
21 April 2011
Traders in government debt will be able to trade yields on sovereign debt in a single product from this month following a new launch from the CME Group.
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CME Group
government debt
bonds
sovereign yield spread futures
CME Globex
The cash-settled Sovereign Yield Spread futures product will begin trading on CME Globex on May 23 and will wrap the yield spread exposure into a single futures contract.
Previously, investors have had to manage and execute individual legs in cash bond/repo markets or across multiple futures exchanges.
The initial launch will cover France, Germany, Italy, the Netherlands, the UK and the US.
Robin Ross, managing director, Interest Rate Products for CME Group, said: “We have had many discussions during the past several months with asset managers, investment banks and hedge funds about their U.S. and European government bond portfolio needs, and the message to us was clear — design a contract that provides capital efficiencies through one clearing facility that is cost effective and meets the regulatory requirements.
“Our new Sovereign Yield Spread contracts will be key risk management tools for anyone with exposure to U.S. and European government bonds and will help facilitate the price and risk transparency that global central banks desire.”