Exchanges must keep innovating if they are to remain competitive. CME Group is set to expand its suite of Nikkei 225 futures contracts with the addition of yen- and US dollar-denominated Micro Nikkei futures on 28 October. Eurex introduced Total Return Futures (TRFs) on the STOXX Europe 600, expanding its exchange-traded derivatives to a broad pan-European benchmark for the first time.
Sized at 50 yen and $0.50, respectively, CME said its new micro-sized contracts will allow traders to capture Japanese benchmark trading opportunities with greater precision.
CME’s Nikkei dollar-denominated futures contracts notional volume saw a 50% increase year-to-date 2024 against the same period in 2023. This jump could explain the motivation behind the new mini contract.
Eurex’s new product was listed on 30 September and follows in the footsteps of strong demand for EURO STOXX 50 Index TRFs, Eurex noted, amid record demand for existing products tracking the STOXX Europe 600, which include futures and options, ETFs and structured products. Unlike a traditional index future, total return futures provide a way of getting exposure to the dividend income of the equity index.
Paul Woolman, global head of equity index products at CME Group, said: “The addition of micro-sized yen- and U.S. dollar-denominated Nikkei futures contracts will allow global market participants to gain efficient access to the broader Japanese stock market, while also mitigating FX exposure and allowing more granular trading capabilities.
“Year-to-date, nearly 75% of trades in our Nikkei futures occurred outside of Tokyo cash hours, underscoring the need for around-the-clock liquidity for global market participants to manage their equity risk. Similar to their larger parent contacts, the smaller size futures contracts will also offer greater potential capital and margin efficiency.”
Micro Nikkei futures will join CME Group’s growing suite of micro equity futures contracts, which have traded more than 2.9 billion contracts to date.
