Nasdaq Launches Futures on the OMX Sweden Small Cap 30 ESG Responsible Index™
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Insights
The introduction of Nasdaq futures on the OMX Sweden Small Cap 30 ESG Responsible Index represents a significant step in the evolution of financial instruments that cater to the growing demand for ESG-focused investment options. The market for ESG investments has seen a substantial increase in recent years, reflecting a broader trend of investors seeking to align their portfolios with their values. This product launch is likely to attract attention from asset managers and retail investors looking to diversify their strategies and gain exposure to the Swedish small cap market in a way that also considers ESG criteria.
In the context of over 300 billion SEK in AUM tracking the Swedish small cap market, the introduction of such futures could facilitate enhanced liquidity and price discovery for these assets. It is also indicative of Nasdaq's strategy to innovate in product offerings that meet specific market needs, potentially leading to increased trading volumes and interest in the Nordic region's financial markets. For investors, the availability of a liquid and diversified product that simplifies investment in small cap stocks while adhering to ESG standards could be an attractive proposition, potentially impacting the flow of capital into ESG-compliant companies.
From a financial perspective, the launch of the OMX Sweden Small Cap 30 ESG Responsible Index futures may influence the underlying market dynamics by providing a new tool for risk management. Portfolio managers, like Marcus Plyhr from Norron Asset Management, highlight the utility of these futures for both long-only equity funds and for hedging in absolute return funds. The ability to hedge more effectively could lead to more efficient fund management and potentially better risk-adjusted returns for investors.
Moreover, the product's potential to be used in the creation and trading of Exchange-Traded Products (ETPs) and structured products could stimulate innovation in these areas. The focus on liquidity by Nasdaq indicates an anticipation of high trading volume, which is important for the success of any derivative product. This could also have a knock-on effect on the broader market by increasing the attractiveness of Swedish small cap stocks and potentially leading to a re-rating of these assets as they become more accessible to a wider range of investors.
ESG considerations are increasingly at the forefront of investment decision-making processes. The Nasdaq futures on the OMX Sweden Small Cap 30 ESG Responsible Index aligns with this trend by providing a tool that screens for environmental, social and governance factors. This enables investors to incorporate ESG considerations into their investment strategies without sacrificing the traditional benefits of futures, such as leverage, liquidity and the ability to hedge.
For asset managers and investors, the ESG screening criteria outlined in the Index methodology offer a transparent framework to ensure investments are contributing to positive societal and environmental outcomes. This could encourage more capital inflow into small cap companies that demonstrate strong ESG practices, potentially driving these companies to further improve their ESG performance. However, it's important to note that the ESG screening process must be rigorous and aligned with investor expectations to maintain the integrity of the ESG label and ensure that it is not merely a marketing tool.
STOCKHOLM, Sweden, April 10, 2024 (GLOBE NEWSWIRE) -- Nasdaq (Nasdaq: NDAQ) today announced the launch of Nasdaq futures on the OMX Sweden Small Cap 30 ESG Responsible Index™ (Nasdaq: OMXSS30ESG™) (Bloomberg Ticker: OMXSMLGI).
With over 300 billion SEK in Assets under Management (AUM) of equity funds in Sweden that track the Swedish small cap market segment, this new futures solution offers an important development for asset managers, retail investors, and ETP issuers.
The Nasdaq futures solution makes it possible for investors to simplify their investment strategies and efficiently gain exposure to the Swedish small cap market. This is done by consolidating a diversified portfolio of small cap stocks into a single, easily tradeable instrument.
Additionally, the incorporated environmental, social and governance (ESG) screening criteria, as outlined in the Index methodology, enables investors to make decisions that may be aligned with positive societal and environmental outcomes. The futures on the small index segment can be used as instruments for cash management and hedging as well as in the creation and trading of ETPs and structured products.
“This is an excellent product that can be used in our long-only equity funds, as well as for hedging purposes in our absolute return funds,” said Marcus Plyhr, Portfolio Manager at Norron Asset Management. “With this innovative setup and great liquidity, we will be able to hedge our funds in a better way than through any other relevant product existing on the market.”
“We are very pleased to meet the strong market demand for an index future covering the Swedish small cap segment,” said Alessandro Romani, VP, Head of European Derivatives at Nasdaq. “The new index future offering is part of Nasdaq Europe’s strategy to support investors with a liquid and diversified product for the Nordic region combined with our strong commitment to ESG.”
Further information on Nasdaq futures on the OMX Sweden Small Cap 30 ESG Responsible™ Index can be found at Nasdaq ESG Derivatives.
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions, and career opportunities, visit us on LinkedIn, on X @Nasdaq, or at www.nasdaq.com.
About Norron Asset Management
Norron is an entrepreneurial and fundamental Nordic active fund manager seeking to generate long term alpha within equities and fixed income. In order to optimize return for our investors, we follow strategies and investment philosophies based on four cornerstones: common sense, competence, accessibility and transparency. For more information visit www.norron.com.
Media Contacts
Nasdaq
Helle Mayor
Phone: +45 9132 4030
helle.mayor@nasdaq.com
Norron Asset Management
Sebastian Uddén
Phone: +45 8 555 069 40
Sebastian.udden@norron.com
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