Credit Futures: What We’re Hearing from Clients
04 Oct 2024
Feedback from the buy-side
- Hedge effectiveness: Client feedback has centered around the hedge effectiveness of directly referencing the corporate bond indices, reducing tracking error risk relative to other credit index derivatives. This also complements the fixed income ETF market by providing a capital efficient method that is market-value weighted across all sectors, including financials.
- Early adopters: Several clients have already adopted the product during the early stages of open interest development. These include large asset managers (some with trillions of AUM) as well as mid-size firms across the U.S. and Europe. There are dozens more in the pipeline that plan to start trading in Q4.
- Cash-settled: Early adoption is possible as the product is cash-settled, mitigating risk of getting “stuck” with a position, and it’s possible to manage risk with other Macro Credit products in cash and OTC derivatives.
