Eurex to launch commodity index futures and options

Derivatives exchange Eurex will launch futures and options based on Dow Jones-AIG commodity sub-sector indexes in the first quarter of 2009.

The nine indexes are the Dow Jones-AIG energy, petroleum, livestock, ex-energy, grains, industrial metals, precious metals, softs, and agriculture. Currently the Chicago Mercantile Exchange is the only other provider of commodity index futures based on the parent DJ-AIG index but not the sub-indexes.

As of the end of the third quarter of 2008, there is an estimated $35 billion tracking the Dow Jones-AIG Commodity Indexes.

"The DJ-AIG has emerged as a leading benchmark to capture the commodity space, and we've seen great interest in it from exchange-traded fund and structured product providers," says Jamie Farmer, senior director, global index operations at Dow Jones Indexes. "That's why Eurex approached us to license these products."

The futures contracts will provide a market exposure or hedging mechanism to institutional and retail investors. Despite the apparent end of the commodities bull run, Farmer remains optimistic about investor interest in the DJ-AIG. "There is significant acceptance that commodities over the long term provide an inflationary hedge and a diversification mechanism," he says.