The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

CDS futures: Exchange-traded contracts set to attract new client base

Plans by International Index Company (IIC) and Eurex to launch a CDS future have yet to resolve the question of how cash settlement will be achieved on reference entities that have defaulted. But once this problem has been solved, the initiative should open up the CDS market to investors that have so far been blocked from trading the OTC market.

 “Once we have a futures contract on the CDS index some people currently trading OTC might migrate to trading futures, but I think it is more likely that this will open up new client bases,” says David Mark, chief executive officer at IIC. “There are many asset managers with pension fund clients who do not permit them to trade CDS but would if they were listed on a recognized futures exchange.”

Untested, untried

The futures contracts will be written against IIC’s iTraxx Europe CDS Index, a static portfolio of 125 CDS on European entities that is rolled every six months. IIC chose to go with Eurex alone in order to keep things simple. “We didn’t want to split liquidity,” says Mark at IIC. “We could have held an auction process and got a number of exchanges involved. But I don’t know how many banks would be prepared to support an untested and untried product with three or four different contracts out there.”

“I remain to be convinced that this is a retail market. How much retail business do you see in stock futures?”
David Mark, IIC

The hope is that a CDS future will increase liquidity and the number of participants in a market.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree