Cboe Global Markets Plans to Expand Credit Futures Offering with Launch of Cboe® iBoxx® $ Emerging Market Bond Index Futures
Cboe Global Markets (CBOE) plans to launch Cboe® iBoxx® $ Emerging Market Bond Index futures (IEMD) on June 17, pending regulatory approval. These futures will provide exposure to U.S. dollar-denominated bonds from emerging market governments and sub-sovereign issuers. The IEMD futures are designed to aid investors in hedging existing exposures, implementing relative value strategies, and managing interest rate and credit risk. The underlying index boasts 535 constituents across 46 countries, with a total outstanding amount of $1.03 trillion as of April 2024. The launch marks an expansion of Cboe's credit market products, aiming to offer operational simplicity and reduced counterparty risk through exchange trading and central clearing.
- Cboe is expanding its credit market products by launching IEMD futures, enhancing its current offerings.
- IEMD futures will be exchange-traded and centrally cleared, reducing counterparty risk.
- The underlying index includes 535 constituents from 46 emerging market countries, totaling $1.03 trillion in outstanding bonds, providing broad market exposure.
- The Cboe's partnership with S&P Dow Jones Indices strengthens its product lineup with credible benchmarks.
- Cboe's IEMD futures will be available nearly 24-hours per weekday, catering to global investors.
- The launch date is planned for June 17, pending regulatory approval, indicating potential imminent trading opportunities.
- The launch of IEMD futures is subject to regulatory review, introducing potential delays.
- The market's initial reaction to the new product is uncertain, which could affect trading volumes and investor interest.
- Competition in the market for emerging market debt products could limit the success and adoption of IEMD futures.
- Any regulatory changes or sanctions on emerging market countries could impact the performance of the underlying index and the IEMD futures.
Insights
Cboe's introduction of the iBoxx $ Emerging Market Bond Index futures could significantly impact investors interested in emerging market debt. By providing a new instrument to hedge exposure and manage credit and interest rate risks, Cboe is expanding its current product suite in a way that benefits strategic portfolio management.
From a financial standpoint, these new futures offer a diversified and capital-efficient means to gain exposure to a high-yielding, shorter duration market. This is particularly relevant given the current global economic climate, where investors are eagerly seeking diversification and higher yields. The
Short-term impacts might include a surge in trading volumes and increased interest in emerging market sovereign bonds. Over the long-term, it will be important to monitor whether these futures facilitate greater liquidity and risk management efficiency, impacting market stability and potential returns.
Rating: 1
The Cboe iBoxx $ Emerging Market Bond Index futures cater to a growing demand for more sophisticated and flexible investment strategies in emerging markets. This development enables investors to implement relative value strategies and hedge their positions more effectively, which could attract a broader audience of institutional investors and fund managers.
By leveraging the iBoxx methodology, which excludes countries in default or under financial sanctions, Cboe ensures that the index maintains a high degree of integrity and reliability. This transparency can be particularly reassuring for investors wary of geopolitical risks. These futures being cash-settled and nearly 24-hour trading further bolster their appeal by providing operational simplicity and accessibility.
It's also notable that these futures contracts are expected to trade on the March quarterly cycle and involve four near-term serial contract months. This structure offers flexibility and aligns with common trading practices, facilitating easier integration into existing investment strategies.
Rating: 1
- Cboe® iBoxx® $ Emerging Market Bond Index (IEMD) futures to provide exposure to emerging market debt
- Futures expected to begin trading on June 17, subject to regulatory review
- Offering expands Cboe's current credit toolkit, which includes
U.S. corporate bond futures and options on futures
IEMD futures are designed to offer investors exposure to
As of April 30, 2024, the iBoxx® USD Liquid Emerging Market Sovereigns & Sub-Sovereigns Index had 535 constituents across 46 emerging market countries, including
"We are excited to build upon Cboe's ongoing collaboration with S&P Dow Jones Indices and expand Cboe's credit market offerings to include emerging market futures," said Rob Hocking, Senior Vice President and Head of Product Innovation at Cboe Global Markets. "Cboe changed the way investors traded volatility 20 years ago with the launch of VIX futures, and today we continue to innovate and strategically offer new ways to manage risk across asset classes. Whether investors or fund managers are looking to hedge current positions or gain broad exposure to the market for bonds issued by governments or sub-sovereign issuers from emerging market countries, IEMD futures are designed to provide that exposure in a
"S&P Dow Jones Indices' iBoxx® USD Emerging Markets Broad Index Series was launched in January 2024 to offer global investors an independent market performance gauge to support their renewed and growing interest in shorter duration, higher yielding fixed income exposures to developing markets for risk management and diversification purposes," said Frans Scheepers, Global Head of Fixed Income, Currency and Commodities Products at S&P Dow Jones Indices. "S&P DJI is pleased to license the iBoxx® USD Liquid Emerging Market Sovereigns & Sub-Sovereigns Index, which was launched in March 2024, and is designed specifically for use with tradable products to Cboe, further strengthening the liquid ecosystem of financial products that are tracking our innovative and pioneering fixed income benchmarks."
IEMD futures will be cash-settled and available to trade at nearly 24-hours per weekday, allowing investors across the globe to manage risk more efficiently. CFE plans to list for trading up to four near-term serial contract months and four contract months on the March quarterly cycle for IEMD futures.
In addition to IEMD futures, CFE currently offers investors exposure to high yield and investment grade
To learn more about CFE and its offerings, visit Cboe
About Cboe Global Markets, Inc.
Cboe Global Markets (Cboe: CBOE), the world's leading derivatives and securities exchange network, delivers cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets, across
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FAQ
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