Lee Bartholomew, Global Head of Fixed Income and Currencies Product Development for Eurex, joins Margareta Hricova and Deboah Fuhr on ETF TV to discuss the benefits of ETF options for investors on ETF TV.
The ETFs industry in Europe has seen significant growth, with $2.04 trillion invested by the end of June. This growth has enhanced the market infrastructure for ETFs, particularly through the development of ETF options.
Benefits of ETF options for investors:
Market Positioning: The business spans cash and derivatives, with a focus on passive investment growth. This has led to a robust global index derivatives business, covering fixed income, equity, and commodities.
Product Ecosystem: The aim is to create a comprehensive product ecosystem that includes both cash and derivatives, catering to multi-strategy and fixed income specialist portfolios. This includes tools like credit futures and treasury options, which are physically settled.
Fixed Income ETF Options: The decision to launch these options was driven by significant growth in the US market, driven by both institutional and retail demand. The goal was to provide European asset managers with accessible, UCITS-compliant products.
US vs. Europe: The US has a more advanced ETF options market with a strong retail presence. In Europe, the market is primarily institutional, with products used for various strategies such as volatility arbitrage, covered calls, and tactical hedges.
Client Needs: The focus is on how ETF options can replicate desired risks cost-effectively and provide deep liquidity. Clients are increasingly comfortable using listed products alongside OTC options for comprehensive market access.
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