Cboe to Launch High Yield Corporate Bond Index Futures Trading on September 10


High Yield Corporate Bond Index Futures Trading Launching on Cboe

Chicago’s Cboe Global Markets, Inc. just announced plans to launch high yield corporate bond index futures trading.

The futures are scheduled to begin trading on September 10, 2018 pending regulatory review. Starting September 10, Cboe will offer trading in Cboe iBoxx iShares High Yield Corporate Bond Index (IBHY) futures.

Cboe is one of the world’s largest exchange holding companies and one of the largest futures markets.

With this latest offering, Cboe is targeting the $8.5 trillion US corporate bond market, which includes robust cash and ETFs.

To date, however, there have been no exchange-listed futures products linked to US corporate bonds. Cboe’s IBHY futures are expected to bring added liquidity and price transparency to the marketplace, allowing traders to hedge and mitigate high yield corporate bond credit risk. It can also help implement fixed-income trading strategies while allowing traders to efficiently allocate to the corporate bond market.

The high yield corporate bond index futures are based on the iBoxx iShares High Yield Corporate Bond Index, or the IBXXIBHY Index. The primary goal of the index is to measure the performance of US dollar-denominated high-yield corporate depth. With the index, traders can get broad coverage of the liquid US high yield corporate bond universe. Cboe will also leverage the deep and liquid iShares ETF ecosystem while bringing the futures contracts to market.

In a press release announcing the news, Cboe explain how the IBHY futures will work:

“Cboe IBHY futures will be cash-settled with a $1,000 multiplier and trade electronically on CFE during regular trading hours (8:30 a.m. to 3:15 p.m. CT). The contracts will be cleared through the Options Clearing Corporation (OCC) and regulated by the Commodity Futures Trading Commission (CFTC).”

Obviously, Cboe has been in headlines across the crypto community in recent months. Cboe is one of the world’s largest futures exchange marketplaces. In December 2017, Cboe became the first company to list bitcoin futures contracts. Now, Cboe has once again innovated by bringing the first high yield corporate bond index futures to market.

Will this have any impact on a bitcoin ETF? It’s not likely. Some of the proposed bitcoin ETFs would contain bitcoin futures contracts traded on Cboe. However, this new bond index futures product is unlikely to affect approval of a bitcoin ETF – which could still occur before the end of September.

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