New product combining euros and gold launched for investors

News - Banking

Written by Ray Clancy

Monday, 16 August 2010 09:27

The international derivatives exchange Eurex is to launch futures and options on Xetra-Gold, the leading exchange-traded commodity (ETC) in Germany by order book turnover.

Xetra-Gold is a zero-coupon bond denominated in euros and issued by Deutsche and will start on September 28, the company confirmed.

‘Commodities are a widely used asset class for its diversification benefits and low correlation to other markets. In particular, gold tends to be a popular investment as it’s considered a safe haven during uncertain economic times,’ said Peter Reitx, Eurex executive board member.

‘Combining two benchmark currencies, euro and gold, in a single product, Xetra-Gold has proven to be a highly liquid and widely traded instrument among European investors. The new futures and options give our members further access to the gold market and will provide more flexibility to suit their specific needs,’ he added.

The Xetra-Gold derivatives are the latest addition to Eurex’s precious metals derivatives. Since February 2009, Eurex has been offering US dollar denominated gold futures and options based on fixing prices of the London Bullion Market. Silver futures and options based on the London Silver Fixing followed shortly after in June 2009.

The new contracts will be denominated in euros and will be physically settled with the delivery of the underlying Xetra-Gold ETC. Additionally, in a separate transaction between the holder of the ETC and Deutsche Börse Commodities, he has the right to request delivery of physical gold.

Expiration dates of the derivatives will be on the third Friday of the next three calendar months as well as in March, June, September and December.

In the second quarter of 2010, Xetra-Gold achieved record inflows of 9.6 tons of gold. Electronic trading volume also totalled €757.3 million, an increase of 55% over the first quarter of 2010. Xetra-Gold is the most traded ETC available on Xetra, representing a 37% share of order book volume in the ETC segment.

The international derivatives exchange Eurex, is jointly operated by Deutsche Börse AG and SIX Swiss Exchange, organizes markets globally. Eurex is home to the Euro zone interest rate and equity index benchmark derivatives.

Eurex’s portfolio of markets includes International Securities Exchange, a leading US options exchange. The ECNs Eurex Repo and Eurex Bonds round out Eurex’s offering for repo and bond trading. In addition, Eurex provides an automated and integrated clearing house, Eurex Clearing AG. Eurex’s global liquidity network comprises around 420 direct exchange members in 26 countries worldwide.