Basis trading for market-on-close (MOC) transactions currently takes place over the counter (OTC). What are the main challenges?
Pieter Entius, Flow Traders: The market is currently quite fragmented. Trading is taking place OTC through brokers. It is quite costly and not very transparent. It is a very inefficient process with high counterparty risk and a high chance of failure.
As a market-maker, what are the main drivers for you to trade Eurex MOC Futures?
Pieter Entius: Flow traders are a major market-maker in the exchange-traded products space. For us, it makes perfect sense to act as market-makers for MOC Futures because we get a lot of exposure and deltas at the end of the day when liquidity is highest. We all try to do as much as we can to get the most efficient pricing for everybody in the market.
What are the main benefits for market participants?
Pieter Entius: For market participants, it will now be a far more easily accessible market and a far more efficient way to trade futures. They can easily see where the futures are priced and traded.
How can firms start using these products today?
Pieter Entius: It is available to everyone who has access to Eurex Futures, so no new access is required. You just use your current set-up.
How do you expect Eurex MOC Futures and similar products to evolve in the future?
Pieter Entius: I think the demands of Mifid II and the need for more transparency, more efficiency and less risk is the first step towards a bright future. If they are a big success, it would be worth expanding into a range of other equity futures. I expect this to be the first trial, which will lead to new upcoming futures.