Eurex To Launch Russian Equity Derivatives

by Phillip Morton, Investors Offshore.com

13 February 2007

The international derivatives exchange Eurex will be launching derivatives on Russian underlyings denominated in US dollars in April 2007, enabling investors to trade emerging markets derivatives on the Eurex platform for the first time.

On 23 April, Eurex will be introducing a future on the RDXxt (RDX extended index), an index calculated by the Wiener Boerse AG (Vienna stock exchange) which contains the 15 largest Russian depositary receipts (DRs) traded on the London Stock Exchange (LSE). This move will allow Eurex to meet the growing demand for a liquid and cost-effective hedging instrument for investments in Russian equities. Settlement will be made in cash, with one index point worth US$25. The future has a maximum maturity of nine months, with expiration dates in March, June, September and December.

The RDXxt index will be calculated by the Vienna stock exchange from the beginning of March 2007; it meets both the US regulators' definition of a broad index, making it of interest to US investors, and the UCITS regulations, which are significant for European financial products.

In addition to the index future, Eurex will be listing single stock futures on all 15 index constituents and four new options on Russian equities Gazprom, Lukoil, Norilsk Nickel and Surgutneftegaz on 23 April. A contract for the single stock futures comprises 50, 100 or 500 shares, depending on the underlying. The contracts have maximum terms of three years with monthly expiration dates and two annual expiration dates in December. At present, Eurex trades 370 single stock futures including all stocks listed on the German DAX blue chip index, the Dow Jones Euro STOXX 50 index and the Swiss SMI index.

The options contracts comprise 50 or 100 shares and have a maximum maturity of 12 months. They are based on the DRs listed on the LSE. Eurex is Europe’s leading equity options exchange with an offering of over 190 equity options from nine countries.

"With these products our customers can participate immediately in the rapidly expanding Russian market," said Eurex CEO Andreas Preuss. "We are offering our clients attractive investment and diversification opportunities in one of the most important emerging markets."

Michael Buhl, Joint CEO of the Vienna stock exchange said, "As one of the leading providers of indices for the Russian market, we are pleased that Eurex is using the RDXxt as an underlying." According to Buhl, the RDXxt is specially designed for the futures market and US investors.

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