Top 5 trends to watch in 2022

1. Individual investor initiative  

The retail market has contributed to the growth in trading activities across India, mainland China and the Republic of Korea. In particular, retail investors In Korea and Japan held 28% and 17% of their respective equity markets by the end of 2020. Within the Eurex Micro Product Suite, an estimated 20% of the volume derives from individual investor flow. Notably, the Micro-Euro Stoxx 50 and Micro-Dax Futures are available for trading 21 hours a day, allowing investors to participate across longer hours. Volumes in the Micro Product suite have surged to exceed 2 million contracts since its launch in April 2021.

Eurex will continue to work with partner brokers in the region on education initiatives for the individual investor and product offering. In the first quarter of 2022, we will launch KOSPI Weekly Options on Korea Composite Stock Price Index (KOSPI), which will trade on the Eurex-KRX Link.

2. ESG investing  

Asia’s appetite for environmental, social and governance (ESG) products has begun to grow, with carbon now as a huge focus for investment. Eurex, the first exchange to offer ESG products, currently has 26 ESG futures and options listed across equity index and fixed income segments. 

ESG development across Asia has been hindered by the fragmentation of the market, where each country has its own regulator and rules. As a result, many funds still prefer to trade Europe. However, we observe a rising demand for Asian investment in ESG, with ESG assets under management in the Asia-Pacific region hitting $93 billion as of end-September 2021. Henceforth, there are plans to extend the trading hours of our ESG products in Asia from 14 to 21 hours, starting from 08:00 SGT.

3. Hedging China risk 

China is the second-largest economy in the world, to which a growing number of firms now want exposure. Eurex has provided investors with a gateway into the Chinese markets, listing nine products with Chinese market exposure. This includes MSCI China futures, launched in September 2021, to replace the existing MSCI China Free futures. Over $2.9 billion notional has been traded since launch, and Eurex has now 89% of the overall MSCI China index futures market share. In fact, Eurex’s most liquid MSCI product is the MSCI Emerging Markets Asia, of which China comprises 44% of the index. This product has an average daily turnover of $946 million and an open interest of $22.7 billion. 

Eurex’s parent company, Deutsche Börse, and index provider Qontigo are looking into working with China’s International Institute of Green Finance to develop a China-specific underlying index. The Deutsche Börse Group’s joint venture with the Shanghai Stock Exchange and China Financial Futures Exchange is also a platform for further developing expansion into China. 

4. Digitisation and cryptocurrency 

Eurex launched Europe’s first regulated bitcoin derivative on September 13, 2021. The contract is based on Xetra’s highly successful bitcoin exchange-traded notes and is cleared and netted under the regulatory safeguards in place at Eurex. 

We’re looking to expand our bitcoin offering in Q3 2022 with a crypto index, futures and options. For now, these products are aimed at retail, but we expect liquidity to grow and eventually encourage institutional investors to the market.

5. Futurisation

Eurex was the first exchange to explore futurisation with the creation of dividend and total return futures that were listed on the exchange more than a decade ago. Since then, our partnership with MSCI has taken off and we are now the number one exchange globally in terms of the number of futures and options listed and open interest.

We believe the trend of futurisation will continue, helped along by regulation such as the uncleared margin rules. We believe the combination of transparent, regulated listed markets and our Prisma margin methodology creates a very competitive, transparent and cost-efficient alternative to the swaps markets.

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