Eurex | Eurex Clearing
A key theme at this year’s Eurex Derivatives Forum in Frankfurt will be futurization. Ahead of the event, we talked to Lorena Dishnica, Product Design, Equity & Index at Eurex, to discuss Total Return Futures and Dividend Derivatives, two pioneering markets for futurization.
Total Return Futures and Dividend Derivatives are the most well-known and successful examples of OTC products transitioning to the listed environment. What were the factors behind that success?
Lorena Dishnica: The key elements were to ensure we addressed both the push and pull elements. The push was regulatory — resulting from the consequences of the GFC and subsequent introduction of UMR. The pull was designing products with our clients that not only addressed the immediate issues but also allowed expansion from hedging tools to near asset classes in their own right.
The launch of Basket Total Return Futures (BTRFs), in the total return market, and mid-curve options, in the Dividend Derivatives suite, have given investors new tools to trade each market. How are these new products refining position taking and expanding use cases?
These are product extensions to an existing set but with new uses and users. BTRFs are supporting the equity financing part of our key derivatives market participants, be it delta one or exotics desks where the repo/financing risks are non-trivial. Dividend index mid-curve options allow new or current participants to take a view or hedge a market that is directionally more uncertain.
What is the outlook for the European Dividend Derivatives market in 2025?
Dividend growth over the last few years has been replaced by a more uncertain outlook on top of historically high levels – this makes the entry point for trades less certain and has by default seen dividend options volumes outstripping those of the traditional index dividend futures, with more protected directional trades or downside protection – whilst volatility still remains high enough to attract two-way flows – so options growth is the outlook!
With the demand for futurization continuing to grow, how can we expect the TRF and dividend derivatives markets to position for that growing participation?
Demand will continue to grow only where the product and its associated venue continue to offer benefits or cost-savings over the OTC alternative. That is particularly so where the opportunities of new counterparts and ease of both trading and understanding of the product can increase participants and volumes. As such, these two new product sets (and no doubt others) will continue to positively evolve.
Visit the panel at Derivatives Forum Frankfurt on 27 February from 12:05-12:45 CET
Futurization - listed alternatives - trading Dividend Derivatives & Total Return Futures
Total Return Futures and Dividend Derivatives have been among the most successful new product launches in listed derivatives markets over the past decade. As market volatility increases so too will the relevance and adoption of the product.
- How do TRFs and BTRFs bring the best of the listed and OTC worlds?
- Why are firms increasingly adopting TRFs and BTRFs to gain exposures to indices?
- Dividends Derivatives – where is the dividends market heading and where are the risks in 2025?
Moderator: Ross Lancaster, Head of Research, Acuiti
Speakers:
