North American and Japanese Tracx to debut today

JP Morgan Chase and Morgan Stanley will jointly launch two North American and one Japanese version of their Tracx credit default swap (CDS) index product today.

Tracx North America (NA) and Tracx NA High Yield replace Morgan Stanley’s US synthetic Tracers program, and JP Morgan’s high-yield credit index product Hydi, respectively.

The economics of the underlying trade with the new Tracx products are unchanged. "For clients and dealers, it is important to initially ensure liquidity and fungibility are not interrupted," said Tom Benison, New York-based co-head of flow North American credit derivative marketing at JP Morgan Chase.

The launch of the two Tracx indexes is important since they represent “a significant amount of trading volume in the credit markets”, according to Lisa Watkinson, New York-based global product manager for flow CDS and credit indexation at Morgan Stanley. “The indexes will continue to serve as the recognised benchmarks of how the market views both investment-grade and high-yield corporate credit,” she added.

Options on Tracers with tenors of three, six and nine months and at-the-money strikes will also be offered initially. "As client demand builds, we will further develop the variety of options offered," Benison told RiskNews.