By Simon Miller
Eurex is to launch an interest rate future based on French notional long-term bonds.
The Euro OAT Future is an extension of benchmark futures on German government bonds and the short, medium and long-term futures on Italian government bonds launched between 2009 and 2011.
The new futures contracts are structured similarly to the Bund future, offering participants a suitable hedging instrument, as well as enabling spread trading between the three fixed-income futures contracts, on 10-year government bonds. The remaining term of the deliverable OAT bonds will be 8.5 – 10.5 years with a maximum maturity at issue of 17 years. The notional coupon will be 6% and the contract value €100,000 (£83,445). The minimum tick size will be fixed at 0.01% (€10 per tick) – in line with the tick sizes of the Bund and BTP futures. Trading hours will be from 8:00 a.m. to 7:00 p.m. CET.
"With the introduction of this new contract we are responding to the great interest shown among market participants in more customized hedging solutions," said Mehtap Dinc, head of Product Development, Eurex. "Moreover, the market for French government bonds is likely to benefit from the extended opportunities in basis and repo trading."