Eurex expands basis trading facility

Eurex will expand its over-the-counter basis trading facility to include selected euro bonds issued by member states of the European Monetary Union on Monday, said the derivatives exchange in a statement. The new facility is designed to complement futures on German government bonds that the exchange currently lists.

“The expansion of trading to include all liquid government paper of the European Monetary Union offers Eurex participants the greatest possible flexibility for the use of their basis-trade transactions in combination with the Eurex fixed-income futures: euro Bund, euro Bobl and euro Schatz,” said Eurex.

The Eurex basis trading facility processes transactions that have been concluded off-exchange in Eurex futures against a simultaneous cash transaction in fixed-income bonds. The resulting Eurex positions are cleared and settled by Eurex Clearing.

Eurex said the move underscores the benchmark status of German capital market futures for all basis trades or simultaneous cash and futures transactions in eurobonds. Only bonds with a remaining or total maturity of at least one year and a nominal value of at least €2 billion will be eligible for use in combination with euro Bund, euro Bobl and euro Schatz futures, Eurex added.