Eurex to Launch Futures on EU Bonds in September

Eurex has announced its intention to launch futures contracts based on European Union (EU) bonds starting in September. This new instrument is designed to offer traders a mechanism for hedging exposure or gaining market access. The launch comes at a time when interest in futures is reportedly increasing, particularly among proprietary trading companies.

The forthcoming contract, named Euro-EU Bond Futures (FBEU), will be physically deliverable. Eurex stated that this contract is intended to complement existing trading activities in EU bonds across both cash and repo markets.

Matthias Graulich, Global Head of Products & Markets at Eurex, commented on the launch, stating, "The launch of the Euro-EU Bond Futures is more than just a new product for Eurex. It is a strategic commitment to supporting European ambitions for greater autonomy at a time when the continent is relying on additional debt issuance and investors are seeking tailored tools to manage their exposure to EU debt."

Eurex also indicated that the product is expected to help improve liquidity within the EU debt market and align the EU more closely with major sovereign issuers like Germany, France, and the United States. Futures already play a significant role in bond pricing and risk management in these markets.

The development of this contract follows close cooperation with the European Commission and market participants. The EU is now considered among the largest global borrowers, with outstanding debt exceeding €600 billion. Its bonds are reported to have reached liquidity levels comparable to those of national governments.

Regarding contract specifications, the new futures contract will cover EU bonds with maturities ranging between 8 and 12 years and will feature a fixed 6% coupon. This structure mirrors that of Eurex's existing 10-year sovereign bond futures.

Eurex's initiative follows a similar step by ICE, which launched futures on an EU bond index in late 2024. However, Eurex's product is described as being unique due to its physical delivery mechanism and integration into established fixed income markets.

Separately, Sean Kozak, CEO of Canadian-based prop firm Tickblaze, recently shared insights on social media regarding why proprietary trading companies are increasingly choosing regulated futures. Mr. Kozak listed several reasons, including capital efficiency, execution quality, volatility edge, the regulatory environment, and trader talent.

In his post, Kozak contrasted the infrastructure of futures markets with that of retail platforms, particularly in volatile conditions. He stated, "When markets are super volatile, prop firms can't afford to experience slippage or latency, which is common for retail platforms. But futures markets offer institutional-grade infrastructure that those platforms simply can't match." He also listed benefits of futures, noting "direct exchange access and low-latency routing, transparent order books with real-time depth, and consistent fill logic during high-volume times."