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DekaBank on the use of Inter-Product Spreads

Release date: 01 Oct 2019 | Eurex Exchange, Eurex Clearing, Eurex Group

DekaBank on the use of Inter-Product Spreads

Interview with Arndt Fassbender, Salestrader ETD, DekaBank

Can you provide some color on the strategies investors deploy to take advantage of market opportunities from spread trading in futures? 

For institutional investors, global and inter-market curve spreads are highly interesting strategies to achieve positive returns, regardless how the yield levels of the individual interest rate market develop. This means that even in challenging market environments, such as yield hikes, positive returns can be realized, enabling active fund managers to beat their benchmark.  

What are the main drivers and benefits for you to trade Eurex Inter-Product Spreads?

The main benefits of the IPS functionality are the guarantee that both legs get executed simultaneously, as well as the ability to set price limits on the spread. Also, of course, high market liquidity is always essential.

How has the European sovereign spread market changed in recent years, and what is your outlook for the near future?

In an environment of sought-after economic convergence, the financial crisis has, over the years, widened the previously narrow spread of 10-year government bonds for German and Italian bonds and established them as a valid trading instrument. In recent weeks, the spread has narrowed considerably again following the end of the government crisis in Italy. The Eurex Inter-Product Spreads are an excellent vehicle for this spread volatility by positioning funds at specific points for possible counter-movements.

How do you expect Eurex IPS for Fixed Income Futures to evolve in the future?

A successful introduction of the IPS functionality will undoubtedly lead to increased trading and position building. It is highly likely that the Eurozone interest rate spreads will continue to be the focus of the new IPS functionality in the future.  This offers exciting opportunities for institutional investors and should broaden the user base of Inter-Product Spreads.


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