Eurex, which provides an international platform for derivatives exchange, is set to launch the Total Return Futures (TRFs) on key STOXX indices. This move is aimed at addressing the high demand of Euro STOXX TRFs by market participants.
The increased demand for STOXX TRFs is being attributed to the need of financial institutions to use basal equities to safeguard their market-linked investments. With TRFs from Eurex, the banks will copy the returns achieved from basal index equities without having to acquire the shares. The exchanger highlighted this as one of the factors that take Eurex’s TRFs superior.
The launch is set to take place on 29 March, where Eurex will introduce Euro STOXX Select Dividend 30 Index TRFs and Euro STOXX Banks Index TRFs. The two indices will work alongside the other existing TRFs being offered by Eurex including Individual Equity, Index TRFs, Collateral Index TRFs and Basket TRFs.
Some of the most notable people who commented on the STOXX TRFs are Stephen Flaegel, who is the Global Head of Indices and Benchmarks at Qontigo, and Randolf Roth, who is a member of the Eurex’s Executive Board. Stephen gave his remarks on how collaborating with Eurex will give investors better yields from equity returns. He added further that the Euro STOXX Select Dividend 30 Index would enable investors to find better companies to invest in, in the 11 Eurozone countries.
Randolf stated that this bold move would influence Eurex’s role in the financial market in a positive way. By moving towards a regulated exchange and a central environment, Randolf noted that Eurex will be the first to help market participants overcome the concerns of Uncleared Margin Rules (UMR).
What will be achieved from the expansion?
- The newly launched STOXX TRFs will increase investor returns. With the Euro STOXX Select Dividend 20 Index, investors can track companies that offer higher dividends. Besides, market participants will have a way to alleviate the problems arising from the newly introduced margin rules for uncleared transactions.
- The launch will also offset the rising demand for STOXX TRFs by market participants. With Eurex’s TRFs, banks will manage to use basal equities to cushion market-linked investments, hence the rise in demand.
Besides the launch, Eurex is also set to start a partnership with FTSE Rusell. The move will boost the TRF sector for the exchanger. The day for launching this partnership officially is also set to happen on 29 March.
