Quantitative investment strategy (QIS) index futures can now be traded on Eurex.
Three index futures are initially available, based on strategies by Société Générale and Solactive. Data on the indices and their components is provided by Eurex’s data partner Premialab.
Stuart Heath, product research and development for equity and index at Eurex, told Global Trading, “This is a listed future, something that we know and love at Eurex. It fits into our systems, from front to back. It’s very much like any other index futures at Eurex, but it has a combination of familiarity, standardisation and a customisable nature.
“Market participants told us about the growth of bespoke index products that they’re distributing to their clients. Essentially, we’re offering an access product. The alternative for the buy side might have been using an OTC swap or a structured note, for example, to gain returns.”
Many sell-side firms already run QIS within their operations – RBC Capital Markets, Barclays and JP Morgan, to name three – and vendors like RavenPack provide them to clients. Large buy-side firms, especially pension funds, are also QIS heavyweights.
READ MORE: Tail risk hedging: Preparing for the crash
Eurex intends to expand its offering based on client demand and market evolution, with potential growth areas noted as long-short strategies, volatility-targeted indices, and derivative overlays.
Heath added, “QIS can sound difficult, but there are many forms of it. We’re not at the very complex stage yet, we’re starting with simpler strategies, which should be familiar to market participants. We could get more complex, but we need to make sure we tick all the right boxes – from regulation to risk management.”
