Italian 10yr BTP future launches on Eurex

Discussion in 'Index Futures' started by Dogfish, Sep 14, 2009.

  1. Dogfish


  2. Dogfish


    "The new Italian government 10-year BTP futures contract was
    hailed as a success on its first day of trading on Eurex Monday, but the
    jury is still out on how well it will do longer-term, say traders. The
    new BTP futures contract opened Monday morning at 115.20, with bid/offer
    spread trading more than a full point wide initially, before narrowing
    to 2 ticks wide, where over 8k contracts traded. "The success of the
    BTP futures contract is on liquidity, which perhaps depends on more
    market makers signing up the contract", added another trader. The jury
    is still out to gauge whether its a huge success, said most traders"
  3. It's the basis that's been trading mostly, as far as I have heard. Liquidity ain't bad, for day one. Real money want this one quite badly, whereas dealers would love to see it crash 'n burn. It would be interesting to see who prevails.
  4. Why dealers would like the contract to fail?
  5. 'Cause if you're a primary dealer in EUR guvvies (such as BTPs), you're in direct competition with BTP futures on Eurex. Investors can choose to express their views and access liquidity through futures, instead of bonds, which means that you'll lose some rather lucrative biz.
  6. Sure; now it's clear; thanks for the clarification but don't the dealers also have interest to hedge their bond exposure with the BTP futures -- the same way happens (sometimes) on UST complex? :confused:
  7. Yes, but, on balance, no matter how you slice it, dealers are liquidity providers. Their customers are liquidity takers. Enter another, competing liquidity provider. Ergo, dealers not super happy.
  8. Dealers are mostly happy about London lunch time...:p