CME Group processes over 6,000 T-Bill futures contracts in first week of trading

Rick Steves

“Trading in spreads between SOFR futures and T-Bill futures will be an important tool in the toolkit, helping us efficiently hedge our risk in the asset class and provide greater liquidity to our clients.”

Within just a week of its launch, CME Group’s Treasury Bill (T-Bill) futures have already seen significant market traction, trading more than 6,000 contracts with open interest surpassing 1,500 contracts. The derivatives giant introduced the futures contracts to serve as a hedging tool against yield risk associated with 13-week U.S. Treasury securities.

The T-Bill futures appear to have immediately resonated with market participants seeking a more efficient way to manage risk. “In just one week, it is clear that clients are turning to our new T-Bill futures to hedge against the yield risk of 13-week U.S. Treasury securities,” said Agha Mirza, CME Group Global Head of Rates and OTC Products.

Notably, the new product is gaining endorsement from key financial institutions. Eric Birenberg, Head of Short Duration Rates Trading at J.P. Morgan, said, “J.P. Morgan is excited to participate in the new T-Bill futures contracts at CME Group. Trading in spreads between SOFR futures and T-Bill futures will be an important tool in the toolkit, helping us efficiently hedge our risk in the asset class and provide greater liquidity to our clients.”

Andrew Hennelly, DRW Co-Head of Global Treasury, also voiced support: “DRW is excited to support the development of trading in CME Group T-Bill futures, which allow for the specific hedging of T-Bill portfolios.”

Riding the wave of increased risk transfer

CME Group’s introduction of the T-Bill futures comes amid a heightened period of risk transfer in the U.S. Treasury market. The company reported that open interest in its existing suite of U.S. Treasury futures has ballooned to $2.4 trillion this year, a 49% uptick year-over-year, alongside a record average daily volume of 5.4 million contracts.

The T-Bill futures are cash-settled and pegged to the 13-week U.S. Treasury Bill auction discount yield. They offer automatic margin offsets against existing CME Group Interest Rate futures and will soon be eligible for portfolio margining against other cleared interest rate swaps and futures.

The early performance indicators of CME Group’s T-Bill futures suggest a bullish outlook for this financial instrument. The strong trading volume and open interest signal a robust appetite among market participants for tools that provide efficient yield risk management and portfolio diversification, particularly at a time when market volatility and interest rate uncertainty continue to loom large.

With endorsements from key players like J.P. Morgan and DRW, as well as its swift market adoption, T-Bill futures are shaping up to be a key fixture in the rapidly evolving landscape of derivatives trading.

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