Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Portfolio > Mutual Funds > Bond Funds

Cboe, BlackRock and IHS Markit Plan First US Corporate Bond Index Futures

By Bernice Napach

X
Your article was successfully shared with the contacts you provided.

Cboe Global Markets is teaming up with BlackRock, the world’s largest asset manager, and IHS Markit Ltd., a global data and analytics firm, to develop the first broad-based U.S. corporate bond index futures.

The new products will be based on the same IHS Markit iBoxx indexes that underpin BlackRock’s high-yield (HYG) and investment-grade (LQD) indexes. They will be listed and trade on the Cboe futures exchange pending regulatory review by the Commodity Futures Trading Commission, and they are expected to launch this summer, starting with the high-yield index futures product.

The corporate bond index futures will function as a “tool to mitigate credit risk in the corporate bond market,” said Chris Concannon, Cboe president and chief operating officer, in a statement.

Martin Small, head of U.S. iShares at BlackRock, said in the same statement that the products will represent “a quantum leap forward towards better bond markets …  that can help improve “price transparency and liquidity of corporate bond markets.”

The index futures products will also provide investors with “broad coverage to hedge against risk,” said Aram Flores, the global head of indices at IHS Markit.

Bond investors have traditionally used credit default swaps to hedge credit risk in the bond market, but their use has declined since the financial crisis, in which they played key roles in the failure of Bear Stearns, Lehman Brothers and AIG, which was the only one of the three to be bailed out by the government. Since then, some investors have used ETFs to hedge bond portfolios, but they are more expensive than futures contracts, which typically require a margin of just 5% to 15% to access the full value of a contract.

— Check out 280 CapMarkets’ Bond Buying Platform Pulls Advisors Across ‘Last Mile’ on ThinkAdvisor.

Bernice Napach

@Think_Napach

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.