Société Générale Corporate and Investment Banking (SG CIB) is the only confirmed market-maker in the new products. Lionel Gibert, the bank’s London-based head of European credit trading, said trading had been “very slow”. By the end of trading on April 3, Eurex reported just under 15,000 contracts changing hands. Of these, 14,019 were referenced to the standard five-year iTraxx Index, while 476 were linked to the Crossover Index. So far, no contracts have been traded on the HiVol Index.
“We are still seeing very few contracts traded, but we’re watching it,” observed Gibert. He said SG CIB would be looking at whether volumes picked up, and whether the contracts are attracting a new type of customer to the credit markets.
A Eurex spokesman confirmed some dealers, such as Deutsche Bank and JP Morgan, were not trading the contracts. Their launch will be watched closely by other derivatives exchanges also looking to list credit derivatives, such as the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE).
The CME plans to begin trading in credit derivatives on May 7 via its electronic platform, Globex. They will be linked to a proprietary index of 32 high-volatility investment-grade North American names. Meanwhile, the CBOE is awaiting regulatory approval to list both single-name and basket credit default options, which it expects to launch during the second quarter of this year.
The week on Risk.net, July 7-13, 2018Receive this by email