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Emerging markets derivatives: The central European option

Austria's futures and options exchange has stolen a march on its larger international competitors with a booming trade in eastern European equity derivatives. Hopes are high for the latest offering, a Polish index product. By TJ Kim.

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The images often associated with Vienna - waltzing couples, horse-drawn carriages and Gothic cathedrals - are far removed from the aggressive world of the trading floors of New York, London or Chicago. Yet over the past year the Austrian capital has become the centre of a booming trade in east European equity derivatives. Last month, the Austrian Futures and Options Exchange (Ötob) launched a futures contract on a Polish equity index. This is the third equity market it trades, following the launch of the Czech traded index (CTX) on May 20 and its Hungarian counterpart in March. Already, it looks as though exchange-traded equity derivatives may end up as the hottest new product of 1997 in central and eastern European capital markets.

Exchanges throughout Europe, including Moscow, St Petersburg and Prague, have tried to set up credible, liquid, derivative contracts. So far, only Ötob has succeeded - although the BUX futures contract traded in Budapest has kept its head above water. Before the introduction of the Ötob products, east European equity portfolios were a nightmare to hedge.


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