Dealers have developed a family of forward contracts referencing the US adjustable rate mortgage (ARM) market. The instruments offer exposure to a new family of indices on agency hybrid ARMs, called Hybrix. The indices start trading on March 1.
"This is the first time in the history of the ARM market that you can short ARMs. So, for those investors who want to hedge their books and for those who have a negative view on the ARM market, you now have the ability to express that view," says Sami