Cboe, BlackRock Team Up On New Futures Products

BlackRock expands its offerings.

Exchange operator Cboe Global Markets is joining with BlackRock, the world’s largest asset manager, and data provider IHS Markit to provide futures contracts that seek to track the $8.5 trillion US corporate bond market. The contracts will be listed and could begin trading on the Cboe Futures Exchange this summer if approved by the Commodity Futures Trading Commission.

One of the futures contracts will be for high-yield bonds and the other for investment-grade debt. Both contracts will be cash settled.

“We believe this will provide our customers with a tool to mitigate credit risk in the corporate bond market,” Cboe president Chris Concannon said in a statement.

The futures contracts will be based on the Markit iBoxx indexes that underlie BlackRock’s high-yield and investment-grade bond exchange traded funds (ETFs). The futures are expected to provide liquid hedging vehicles for institutional investors with exposure to US corporate debt.

Martin Small, head of US iShares at BlackRock, said: “A growing ecosystem of market-access vehicles, chiefly bond ETFs and bond index futures, are a critical step toward improving the price transparency and liquidity of corporate bond markets.”