Eurex to Launch Futures on MSCI Brazil

Eurex has announced the upcoming launch of futures on the Latin American benchmark index MSCI Brazil as the firm addresses growing demand for investment and trading instruments focused on the LatAm region.

The derivatives arm of Deutsche Börse Group has scheduled the launch of the new contracts for 6 September, which will allow market participants to directly hedge or gain exposure to the largest Latin American market and benefit from efficiencies by centralizing MSCI derivatives in one exchange and clearinghouse, with respective operational, clearing and risk management benefits.

Randolf Roth, Member of the Eurex Executive Board at Eurex: “We are pleased that we can finally offer our community direct access to the Brazilian market, which accounts for by far the largest weight – 66 percent – in the MSCI EM Latin America Index. For the first time, futures on the MSCI Brazil will be traded in an order book that offers all the advantages of efficient and transparent pricing.”

The derivatives firm covers the Latin American market with futures on MSCI EM Latin America, as well as with country index futures for Mexico, Peru, Chile, and Colombia.

On the same day of the launch of the new futures contracts on the MSCI Brazil, Eurex will also launch futures on MSCI China and will begin to delist MSCI China Free Index derivatives, which is identical in composition and weighting to the MSCI China Index, which is more widely used, and so it will be terminated.

Eurex boasts a total of 186 futures and options of MSCI derivatives, with a total open interest standing at 2.6 million contracts by the end of July, which is more than 50 percent of the global open interest.

The derivatives firm has recently launched a “unique service” for cross-currency swaps and OTC FX that offers netted settlement guaranteed by Eurex Clearing.

Commerzbank, J.P. Morgan, and Morgan Stanley have gone live with the clearing service for deliverable cross-currency swaps and OTC FX.

The launch underscores Deutsche Börse Group’s ambition to support the move from OTC to central clearing. Eurex is the first clearing house to physically settle cleared cross-currency swaps in CLSClearedFX, CLS’s settlement service for cleared FX products.

Clearing and settling on a net basis across cross-currency swaps and OTC FX significantly reduces capital requirements under SA-CCR, the standardized approach for measuring counterparty credit risk.

Eurex offers OTC FX clearing in FX Spot, FX Forward and FX Swap, which is matched on 360T, Deutsche Börse’s global FX unit. The launch of non-deliverable forwards (NDF) clearing is scheduled for the second half of 2021.

Later this year, Eurex Clearing will offer clearing for both deliverable and non-deliverable FX products, thus providing further capital and operational efficiencies to Clearing Members.