Nee, dit is niks jongensIt’s going downhill at Euronext. In a press release, the exchange announced to introduce weekly index futures in the fourth quarter of this year. That’s the most silly idea I’ve heard in a while.

In the AEX, there have been weekly options for a long time. A big succes, decent volumes (although most of it at TOM). Market makers usually have to juggle a bit with their delta exposure. Hedging delta’s with monthly futures has a maturity mismatch. These market makers could use weekly futures.

The problem is – they are the only ones. Every sane investor or trader will head for the most liquid future, which is always the front month. Apart from some dividend impact, there’s not much interesting in other maturities.

It’s difficult to get a liquid future market. TOM failed miserably with their AEX future market, and won’t even bother to launch futures on their NL20 index.

Quoting Adam Rose, head of financial derivatives at Euronext:

“This is a good example of how we want to drive growth in our derivatives franchise across Europe by being innovative and responding rapidly to client needs”

True. Euronext is absolutely the first in Europe to launch weekly futures. In reality, there is a reason these things don’t exist anywhere else on the continent. For example, take the most heavily traded index product in Europe, the Eurostoxx. The Eurostoxx futures are quarterly futures – they don’t bother for monthly maturities.

Jack
Jack