CME’s €STR goes live to address risk in overnight money market and repo rates in Euro markets

Rick Steves

“JP Morgan is delighted to support trading in €STR futures at CME Group. The execution strategy that allows simultaneous trading vs. SOFR futures provides the hedges we need in our cross currency and forward foreign exchange businesses”, said Nok To, Managing Director and Head of EMEA STIR Trading at JP Morgan.

CME Group’s new suite of overnight index futures based on the Euro Short-Term Rate (€STR) has gone live, 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.

Trading interest rates based on overnight benchmarks

CME Group launched overnight index futures based on the Euro Short-Term Rate (€STR) much to the delight of leading global banks, including JP Morgan and Citi, which have praised the futures product, particularly at a time of economic uncertainty.

Mark Rogerson, EMEA Head of Interest Rate Products, CME Group, said: “As the world continues to adapt to trading interest rates based on overnight benchmarks, we are pleased to further support the transition by offering €STR futures contracts. At a time of continued economic uncertainty, our new futures will help clients price and manage risk in overnight money market and repo rates across European markets.”

Nok To, Managing Director and Head of EMEA STIR Trading at JP Morgan, commented: “JP Morgan is delighted to support trading in €STR futures at CME Group. The execution strategy that allows simultaneous trading vs. SOFR futures provides the hedges we need in our cross currency and forward foreign exchange businesses.”

Akshay Singal, Head of EMEA STIR Trading at Citi, added: “Citi is keen to adopt trading in €STR futures at CME Group. Managing basis risk via the innovative Single Contract Basis Spread futures directly addresses the needs of the market and our customers.”

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