Euronext announced the introduction of Total Return Futures (TRF) on the FTSE MIB Index, FTSE Russell’s primary benchmark for the Italian equity market. This launch builds on the success of the Total Return Futures on the CAC 40 Index, which Euronext introduced as its first TRF on a national benchmark in November 2018.
TRF are designed to replicate the full economics of OTC total return swaps in a cost-effective manner, while simplifying the product settings to make them more suited to the exchange environment.
The FTSE MIB Total Return Future is a listed solution that enables investors to gain exposure to the implied equity repo rate on the constituents of the FTSE MIB Index in a transparent and secure trading environment via a centralized order book. The contract offers long-term exposure, with quarterly maturities available for up to ten years, catering to the needs of long-term investors.
Clearing for the FTSE MIB TRF is facilitated through Euronext Clearing to mitigate counterparty risk and provide strong margin offsets. The TRF product ensures payoff accuracy and fungibility through a clear daily settlement procedure and the possibility to trade at the index close. Market transparency is enhanced with on-screen prices, while liquidity is supported by market makers quoting a spread as an annualized rate in basis points (+/-).
Anthony Attia, global head of Derivatives and Post-Trade at Euronext, said in a statement: “In 2018, Euronext introduced Total Return Futures on the CAC 40 Index, receiving immediate positive response from market participants thanks to its strong benefits. Since then, more than 1.6 million contracts have been traded, representing a total nominal value traded of almost 120 billion euros. This new offering follows the successful migration of the Euronext financial derivatives markets to Euronext Clearing, paving the way for further innovation and the development of new products and solutions.”
Fiona Bassett, CEO at FTSE Russell, an LSEG business, said in a statement: “Our collaboration with Euronext reflects the strength of the FTSE Russell index franchise globally, allowing us to support our clients with further innovation and product development to successfully address their needs.”