Intercontinental Exchange’s (ICE) has launched four new corporate bond index futures, designed to answer institutional investors’ appetite for credit futures.
The product launch comes after rival EUREX’s US$ credit futures, based on Bloomberg US Corporate Index Futures and Bloomberg US High Yield Very Liquid Index Futures started trading in September. They are competing with the CME concurrent credit futures offering.
In a strategic collaboration with MSCI and MarketAxess, ICE introduced futures contracts tracking corporate bond indices across investment-grade and high-yield markets in US dollars and euros. The move comes as investors seek more nuanced tools to navigate increasingly complex fixed-income landscapes.
“Credit futures are an important tool for a healthy market,” said Kat Sweeney, global head of data and ETF Solutions at MarketAxess, highlighting the broader significance of the launch. “These tradable indices will generate more liquidity in the cash markets, providing our institutional clients with enhanced trading capabilities.”
The futures leverage MarketAxess’ Relative Liquidity Scores – a proprietary metric rating the current liquidity of individual bonds – to try and deliver a more dynamic and responsive approach to tracking corporate bond performance. By incorporating these metrics, the indices could lower tracking errors and more reliable market replication.
Goldman Sachs executive director Antony Harden emphasised the market’s readiness, noting the “couldn’t be better” timing as client adoption of credit futures reaches new heights.
ICE’s existing MSCI futures infrastructure supports these new credit instruments. Early 2024 data show an average daily volume of 190,000 contracts for the MSCI complex futures representing approximately US$13.6 billion in notional value.
