How Equity Market Sectors are Evolving
By Anna Ellis
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Managing Sector Risk

Sector futures provide a vehicle for market participants to manage their exposure to sectors and rebalance when necessary.

CME Group lists futures on the 11 GICS sectors, in addition to 8 other sectors, and these products can be traded in multiple ways, including on CME Globex, through Basis Trade at Index Close (BTIC) transactions to target the cash close, and via derived blocks, a new functionality added in May 2022.

Sector futures have experienced growing interest over the years, reaching over 20,000 contracts traded each day on average. Open interest – or the number of unsettled contracts – stands at nearly 350,000 across the CME Group sector futures suite as of March 2023.

Sector Futures ADV OI

CME Group’s E-mini Select Sector Futures follow the same structure and composition as the underlying S&P sector indexes, making them an attractive way to manage sector exposure.

The growth in sector futures highlights the increasing demand from market participants to manage sector exposure. GICS ensures the exposure that each sector classification provides is accurately reflected by the underlying constituents’ main source of revenue. The ability for GICS to evolve over time makes sure that sectors remain both current and as useful as ever.

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About the author

 

 

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

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