Turning to Europe

The Chicago Mercantile Exchange’s US CPI futures contract has not lived up to expectations, with dealers criticising the design of the contract for low trading volumes. Undaunted, several exchanges are now looking to launch inflation futures in Europe. By Hann Ho

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The US consumer price index (CPI) futures contract was hailed as a breakthrough for the inflation-linked derivatives market when it was launched by the Chicago Mercantile Exchange (CME) in February 2004. More than a year on, those expectations have been revised. Trading volumes – low to start with – have dropped dramatically, while dealers have criticised the contract’s design as fundamentally flawed.

Undeterred, a number of exchanges are now looking at the more active European inflation market

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