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Fixed Income Market Briefing

Release date: 20 Jun 2018 | Eurex Exchange

Eurex Exchange's Fixed Income Highlights June 2018

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Market briefing

In May, geopolitical risks such as the uncertainty arising from the Italian elections continued to drive European FIC markets. Short covering in Bund Futures helped to drive futures volumes in German benchmark derivatives products. The spread between Bunds and BTPs was a focal point for fixed income traders and widened to levels not seen for five years, with a spread at 232 basispoints (bps). Options volumes saw a strong pick-up, partly driven by the Italian turmoil and partly by short covering as Bund Futures rallied hard and the market sought protection to the upside. Implied volatility on ten-year Bunds rose from 3.85 percent to 5.5 percent, the top end of the 4 to 6 percent corridor that we have seen for much of the past 24 months.

In the Italian BTP segment, Eurex had record volumes both in terms of open interest and traded volumes and I would like to thank our members for the support they showed in the volatile markets. It was thanks to their support that Eurex was able to offer end-clients access to liquid markets. Options on the French and Italian ten-year futures and options saw record volumes which were underpinned by our committed Market Makers who provided the liquidity.

Looking ahead to the summer, it looks like the geopolitical risks and potential trade wars will continue to give markets enough food for thought and which should help to foster volumes on the Eurex trading platforms.

Lee Bartholomew, Head of Fixed Income & FX Product R&D, Eurex

Facts & figures


Product news



The current political situation in Italy keeps the markets busy: Lee Bartholomew, Head of Fixed Income & FX Product Research and Development at Eurex, discusses recent developments in Eurex' interest rate markets. Read more.


Watch the highlights of our interview series on fixed income ETF options. Ashley Curtis and Dan Philip from BlackRock and Lee Bartholomew from Eurex talk about market evolution, future trends, challenges and growth opportunities as well as trading strategies.

Clearing news



Eurex Clearing installed a Fixed Income and Currency ("FIC") Board Advisory Committee for the purpose of consulting with and making recommendations to the executive boards of Eurex Clearing with respect to the general FIC strategy as well as product and service expansions. The Committee consists of ten members. They are nominated for a two-year term to the Committee based on their performance in the Eurex Clearing Partnership Program. In addition, the five most active participants of the Partnership Program will be represented in Eurex Clearing's supervisory board. Read more on how the performance-based program aims to build a balanced ecosystem where responsibilities and benefits are fully aligned between all participants in terms of economics and governance.

Eurex Clearing AG has been recognized as a foreign central counterparty by the Swiss Financial Market Supervisory Authority (FINMA) under the Financial Market Infrastructure Act (FMIA). Furthermore, the Swiss National Bank classified Eurex Clearing as a systemically important financial market infrastructure for the stability of the Swiss financial system. The new set-up enables Eurex Clearing to continue to serve its clients in the Swiss markets as usual. Read more.


Exchanges are providing solutions to address the new MiFID II and MiFIR regulations by bridging the old OTC methods to an on-exchange platform. The traditional voice-based RFQ model has been translated into an on-exchange platform introduced by Eurex called Eurex EnLight. This platform provides the best of both worlds - the ability to select trading counterparties as well as track your adherence to the new best execution requirements. Eurex EnLight is currently available for fixed income options and futures only. It is planned to further continue the roll-out of Eurex EnLight by extending the product scope to equity and equity index derivatives from 19 June 2018.

TABB Group published a market note on the innovative selective RFQ approach, stating Eurex EnLight as a prime example of merging the old and the new trading paradigms. Read more.

Events

Derivatives Forum in Frankfurt: 130 participants attended


Representatives from the buy- and sell-side attended the Derivatives Forum in Frankfurt, where Katja Dofel, well-known German TV host, guided everybody through a series of panels and presentations. Topics covered included artificial intelligence, machine learning, the future impact of blockchain technology and the opportunities that will arise from Brexit. Read more.?


This year's annual Derivatives Forum will focus on the key issues that will shape the derivatives industry of the future - including product innovation across asset classes, fintech, and geopolitical issues such as Brexit - and assess how ready market participants are to face the challenges and opportunities that lie ahead. Registration for Amsterdam is now open.?

IDX 2018 highlights


IDX 2018 featured various panel sessions, including Eurex and Eurex Clearing board members. Thomas Book, CEO of Eurex Exchange, spoke about exchanges and building markets for the future in the "Exchanges - Building Markets for the Future" session. "We saw a decade of work on regulation, now we see a focus on growth again. This creates the need for sophisticated risk management."

The post-Brexit capital markets landscape was at the center of? day two's "Brexit - the Right Model for Financial Markets" panel with Matthias Graulich, Member of the Executive Board of Eurex Clearing AG noting that "We need to plan and prepare appropriately for all possible outcomes." Post-Brexit market access was a key topic, with 60 percent of Eurex Clearing business stemming from U.K.-based Clearing Members. For more information on Brexit, see our website.

Eurex also hosted a networking event "Eurex Summer Garden Party" which allowed delegates enjoy the Old Brewery setting while meeting people from across the industry.


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Fixed Income Highlights - June 2018 edition

Fixed Income Highlights - June 2018 edition

Market briefing In May, geopolitical risks such as the uncertainty arising from the Italian elections continued to drive European FIC markets.

Fixed Income Highlights - IDX 2018 May special edition

Fixed Income Highlights - IDX 2018 May special edition

OTC IRD volume development May saw record volumes at Eurex Clearing with total open interest now over EUR 6.5 trillion and overall notional ...

Fixed Income Highlights - April 2018 edition

Fixed Income Highlights - April 2018 edition

Market briefing . Lee Bartholomew, Head of Fixed Income & FX Product R&D, Eurex Facts & figures Focus Clearing: Record Activity in ...

Fixed Income Highlights - March 2018 edition

Fixed Income Highlights - March 2018 edition

Market briefing It has been a relatively robust period for European fixed income markets and the wider markets in general. Eurex has seen a ...

Fixed Income Highlights - February 2018 edition

Fixed Income Highlights - February 2018 edition

Market briefing Philip Simons, Global Head of Fixed Income Sales & Business Development,?gives an update on the newest developments?at Eurex, ...

Fixed Income Highlights - January 2018 edition

Fixed Income Highlights - January 2018 edition

Market briefing First of all, I'd like to take the opportunity to say a huge thank you to our members and clients who continued to show Eurex ...

Fixed Income Highlights - December 2017 edition

Fixed Income Highlights - December 2017 edition

Market briefing October proved to be a challenging month for European Fixed Income markets. The lack of event risk, together with low levels of ...

Fixed Income Highlights - November 2017 edition

Fixed Income Highlights - November 2017 edition

Market briefing October proved to be a challenging month for European Fixed Income markets. The lack of event risk, together with low levels of ...

Fixed Income Highlights - October 2017 edition

Fixed Income Highlights - October 2017 edition

Market briefing Looking back on the third quarter of this year, I'd say that global markets have held up well. Although we have seen implied ...

Fixed Income Highlights - September 2017 edition

Fixed Income Highlights - September 2017 edition

Market briefing Fixed income markets have remained relatively resilient despite the slow-down in global markets overall. Both futures and options ...

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