CME Group to launch options on €STR (Euro Short Term Rate) futures in Q1 2024

Rick Steves

In November, CME Group €STR futures reached an average daily volume (ADV) of 17,000 contracts – with a single-day record of 39,836 contracts traded on November 10.

CME Group, a global leader in the derivatives marketplace, plans to introduce options on €STR (Euro Short Term Rate) futures in Q1 2024. This move aims to expand the Group’s €STR derivatives offerings.

The launch is in response to the significant increase in the volume and open interest of €STR futures. CME Group’s introduction of €STR options is aimed at providing clients with comprehensive tools to manage risk in European interest rate markets amid ongoing economic uncertainties.

80% of traders use CME for €STR futures

Mark Rogerson, EMEA Head of Interest Rate Products, CME Group, expressed confidence in the addition of options to strengthen CME Group’s position in providing effective risk management solutions in the European interest rate sector. “With consistently strong volumes, open interest in our €STR futures has continued growing exponentially during 2023, now up to 29,000 contracts, with over 80% of market participants choosing CME Group as their home for European Short Term Rate futures trading.

“Adding options to our growing €STR futures contracts will provide clients with the first holistic €STR derivatives solution that allows them to navigate continued economic uncertainty and more accurately manage their risk in European interest rate markets”, Rogerson added.

In November, CME Group €STR futures reached an average daily volume (ADV) of 17,000 contracts – with a single-day record of 39,836 contracts traded on November 10.

One-year anniversary of overnight index futures based on €STR

It was last year that CME Group launched a new suite of overnight index futures based on the Euro Short-Term Rate (€STR), available to trade on CME Globex and for submission of clearing via CME ClearPort.

Receiving automatic margin offsets against existing CME Group interest rate futures upon launch, €STR futures provide an efficient way to hedge European money market rates, with contracts including €STR 3-Month futures and €STR 3-Month Single Contract Basis Spread futures, complemented with €STR vs SOFR inter-commodity spreads.

€STR futures enable granular price discovery across the forward curve, IBOR/OIS basis trading, as well as managing cross-country basis spreads and price differentials between the E.U. and U.S. interest rates.

BrokerTec launched European repo as a spread to the €STR

Last month, BrokerTec unveiled an extension to its services that allows clients to trade European repo as a spread to the Euro Short-Term Rate (€STR). This move provides clients enhanced flexibility and efficient hedging options in a volatile interest rate landscape.

With this update, BrokerTec’s offering is extended across all European repo markets, excluding Italy and Spain. This addition complements the existing capability to trade French repo against €STR.

This announcement comes on the back of the CME Group’s introduction of €STR futures last year. The trading of European repo tied to €STR is available on BrokerTec’s EU Regulated Market, operated by CME Amsterdam B.V. This is a crucial point, especially in a financial landscape where regulatory oversight is intensifying.

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