Chicago-based global derivatives market CME Group Inc. will start listing a euro-denominated futures contract on the S&P 500 index starting Oct. 27 to meet demand from European investors or arbitrageurs, said CME Managing Director Scot Warren.
The world's largest exchange is readying the launch of the new contract at a time when financial markets are still unsettled, boosting the need for foreign asset managers to hedge their U.S. equity holdings or gain more exposure to that asset class. The contract comes in mini size, or 50 times the value of the S&P 500 index.
I wish we had done this two months ago, Mr. Warren said of the Euro E-mini S&P 500 in an interview Sept. 15, the day Lehman Brothers Holdings Inc. filed for bankruptcy.
For European money managers who manage global portfolios, the largest concern is the foreign exchange conversion. The contract in euros removes the currency risk, the CME executive said.
The new contract can also be used in spread trades with the S&P 500 or other euro-denominated derivatives. Isabelle Clary