CHICAGO, May 24, 2021 /PRNewswire/ -- CME Group, the
world's leading and most diverse derivatives marketplace, today
announced it will launch interest rate futures based on the
Bloomberg Short-Term Bank Yield Index (BSBY). These new contracts
will be available for trading in Q3, with OTC clearing of BSBY
swaps introduced in Q4, pending regulatory review.
"In response to client demand for credit sensitive instruments,
we are pleased to introduce BSBY futures to offer both price
discovery and risk hedging for the BSBY Index," said Sean Tully, Global Head of Financial and OTC
Products at CME Group. "Our launches of BSBY futures in Q3 –
and cleared BSBY swaps in Q4 – will complement our existing
short-term interest rate futures and Term SOFR index products,
providing global market participants with a suite of
capital-efficient risk management tools to manage their interest
rate exposures going forward."
"We look forward to the upcoming launch of BSBY futures, which
will help meet the current client need for credit sensitive rates.
As the use of BSBY grows in the U.S. lending markets, these futures
will allow market participants to manage their risk," said
Umesh Gajria, Global Head of Index
Linked Products at Bloomberg. "BSBY futures and BSBY linked cleared
swaps will be a strong complement to the SOFR-linked instruments at
CME Group."
"The launch of CME Group futures and cleared swaps on the
IOSCO-compliant BSBY index will be a promising development for FICC
market structure," said Sonali
Theisen, Head of FICC E-Trading and Market Structure at Bank
of America. "Alongside SOFR, we believe credit sensitive products
will play a part in the evolution of the U.S. derivatives market as
it prepares for LIBOR cessation."
"Citi has seen strong interest for credit sensitive rate indices
to hedge cash and loan exposures from end-users alongside SOFR as
the industry transitions away from LIBOR," said Geoffrey Weber, Head of Americas Linear Rates
Trading at Citi. "With any OTC derivatives instrument, a
robust and liquid futures market is a necessary building
block. With that said, we welcome CME Group's latest entry
into the alternative reference rates space with their BSBY futures
product."
"The introduction of BSBY futures and cleared swaps to the
market is an important step forward in the transition away from USD
LIBOR," said Thomas Pluta, Global
Head of Linear Rates Trading at J.P. Morgan. "We have seen client
demand for both credit sensitive rates products and SOFR rates
products and having the availability and choice of a variety of
indices that suit the needs of our diverse client base will help
accelerate this critical transition process."
BSBY has been developed to address the needs of the market by
providing a series of credit sensitive reference rates that
incorporate bank credit spreads and define a forward term
structure. BSBY seeks to measure the average yields at which large
global banks access USD senior unsecured marginal wholesale
funding. It adheres to the IOSCO Principles, and is a proprietary
index calculated daily and published at 8:00
am (EST) on each U.S. business day. BSBY is currently only
available for use in the U.S. markets.
CME Group BSBY futures will be financially settled. They will be
listed on and subject to the rules of CME. More information is
available at www.cmegroup.com/bsby.
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) enables clients to trade futures,
options, cash and OTC markets, optimize portfolios, and analyze
data – empowering market participants worldwide to efficiently
manage risk and capture opportunities. CME Group exchanges offer
the widest range of global benchmark products across all major
asset classes based on interest rates, equity
indexes, foreign exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform, fixed
income trading via BrokerTec and foreign exchange trading on the
EBS platform. In addition, it operates one of the world's leading
central counterparty clearing providers, CME Clearing. With a range
of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
reconciliation services through TriOptima, and trade processing
services through Traiana.
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Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board
of Trade of the City of Chicago,
Inc. NYMEX, New York Mercantile Exchange and ClearPort are
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of their respective owners.
CME-G
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SOURCE CME Group