CME Group Announces Q4 2022 Launch of European Overnight Index Futures

Rhea-AI Summary

CME Group has announced the upcoming launch of European Overnight Index futures based on RepoFunds Rate (RFR) benchmarks and the Euro Short-Term Rate (€STR) in Q4 2022, pending regulatory approval. These cash-settled contracts will provide market participants with effective tools for hedging overnight money market and repo rates in Europe, amid ongoing geopolitical uncertainties. The RFR benchmarks are derived from centrally cleared repo trades, administered by CME Group Benchmark Administration. This move is expected to enhance risk management for customers dealing with sovereign debt in Europe.

Positive

• Launch of European Overnight Index futures enhances product offerings.
• New tools aimed at helping customers hedge overnight money market and repo rates.
• Support for managing sovereign debt risk in European markets.

Negative

• None.

CHICAGO, Aug. 5, 2022 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced it will launch European Overnight Index futures based on RepoFunds Rate (RFR) benchmarks and the Euro Short-Term Rate (€STR) in Q4 2022, pending regulatory review.

RFR futures will be cash-settled contracts based on RFR benchmarks, a robust measure of overnight funding costs. The benchmarks are derived from centrally cleared repo trades executed on BrokerTec, a leading provider of electronic trading platforms and technology services in fixed income markets owned by CME Group, and MTS, a leading European electronic fixed income trading platform, part of the Euronext group. RFR benchmarks are administered by CME Group Benchmark Administration Limited (CBA).

"Our new European Overnight Index futures will support customers with liquid and capital efficient tools for hedging overnight money market and repo rates in European markets," said Sean Tully, CME Group Global Head of Rates and OTC Products. "At a time of geopolitical uncertainty and large-scale transitions in monetary policy, we continue to provide market participants with new tools to meet their evolving risk management needs. In addition to our increasingly liquid SOFR futures that help customers manage interest rate exposure in the U.S., our new European futures will help our customers manage sovereign debt risk in Europe."

Available to trade on CME Globex and for submission of clearing via CME ClearPort,  European Overnight Index futures will be subject to the rules of CME, cleared by CME Clearing, and will receive automatic margin offsets against existing interest rate futures upon launch.

For more information on this product, please see: www.cmegroup.com/european-rates-futures.

About CME Group

As the world's leading derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing. CME Group Benchmark Administration Limited (CBA) capitalizes on CME Group's wealth of transaction-based data in the calculation of its indices and benchmarks. CBA is registered under Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019 (SI 2019/657) is authorized and supervised by the UK Financial Conduct Authority (FCA) and is aligned to the IOSCO Principles for Financial Benchmarks.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and, E-mini are trademarks of Chicago Mercantile Exchange Inc.  CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc. BrokerTec and EBS are trademarks of BrokerTec Europe LTD and EBS Group LTD, respectively. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc.  All other trademarks are the property of their respective owners.  

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SOURCE CME Group

FAQ

What are the European Overnight Index futures announced by CME?

CME Group is launching European Overnight Index futures based on RepoFunds Rate (RFR) and Euro Short-Term Rate (€STR) in Q4 2022.

When will CME launch the European Overnight Index futures?

The European Overnight Index futures are scheduled for launch in Q4 2022, pending regulatory review.

How do the new futures support risk management?

The new futures provide tools for hedging overnight money market and repo rates, crucial for managing sovereign debt risk in Europe.

What is the significance of the RepoFunds Rate (RFR) benchmarks?

RFR benchmarks measure overnight funding costs and are derived from centrally cleared repo trades, offering a robust financial tool.

How will the new futures be traded?

European Overnight Index futures will be available to trade on CME Globex and cleared via CME ClearPort.