CME Group to launch U.S. Corporate Bond Index futures

Rick Steves

“Our new U.S. Corporate Bond Index futures will bring clients the speed and precision they need to manage risk and pursue opportunities in the market, while gaining capital efficiencies through portfolio margining.”

CME Group

CME Group has plans to introduce U.S. Corporate Bond Index futures in summer 2024, pending regulatory approval, the derivatives marketplace announced.

The new futures product will be based on two Bloomberg indices: the U.S. Corporate Index, tracking investment grade corporate bonds, and the U.S. High Yield Very Liquid Index, focusing on the high-yield corporate bond market.

U.S. Corporate Bond Index futures contracts will be available for trading on CME Globex and eligible for clearing through CME ClearPort. They will adhere to the rules of a Designated Contract Market at CME Group and offer automatic margin offsets with existing CME Group Interest Rate and Equity Index futures.

“Exposure to corporate bond market and hedge credit risk”

Agha Mirza, CME Group Global Head of Rates and OTC Products, said: “As corporate debt issuance continues to increase across sectors, market participants are looking for tools to help them navigate growing credit exposure. Our new U.S. Corporate Bond Index futures will bring clients the speed and precision they need to manage risk and pursue opportunities in the market, while gaining capital efficiencies through portfolio margining.”

Umesh Gajria, Global Head of Index Linked Products, Bloomberg Index Services Limited, commented: “Bloomberg Indices is proud to be at the forefront of advancing the evolution of credit markets and we’re excited to be working with CME Group to bring this new offering to market. The launch of listed futures on the Bloomberg U.S. Corporate Bond Indices is intended to provide investors with the ability to more accurately and efficiently gain exposure to the corporate bond market and hedge their credit risk.”

CME Group and DTCC launched an enhanced Treasury cross-margining arrangement

Following the approval from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in September 2023, CME Group and DTCC went live with cross-margining for a broader range of fixed income products last month.

The products enhanced with cross-margining include CME Group’s SOFR futures, Ultra 10-Year U.S. Treasury Note futures, and Ultra U.S. Treasury Bond futures, along with FICC-cleared U.S. Treasury notes and bonds.

The new arrangement allows for capital efficiencies for clearing members involved in both U.S. Treasury securities and CME Group Interest Rate futures. The arrangement facilitates Repo transactions with Treasury collateral having over a year to maturity also included.

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