Eurex plans to extend ESG derivatives range after successful first six months

Exchange says it has traded 235,000 contracts with open interest peaking at €782m

Eurex, the Frankfurt-based derivatives exchange, says it plans to expand its environmental, social and governance (ESG) range following the successful launch of its ESG Futures six months ago.

The exchange, which is owned by Deutsche Börse, launched its first ESG derivatives – futures on the STOXX indexes with ESG-X, Low Carbon and Climate Impact criteria — in February with the aim of providing “investable and easy access” to ESG derivatives while offering lower carbon footprints and lower trading costs for institutional investors.

Now, six months in, it says it has traded 235,000 contracts and that open interest (the number of contracts or commitments outstanding) has peaked at €782m.

It says this was “just the beginning”.

The move comes amid a push by Frankfurt to become a sustainable finance hub that has also seen the State of Hessen, home of Germany’s financial capital, become the first state in the country to sign up to the Principles for Responsible Investment (PRI). Hessen then went on to acquire a stake – alongside three of Germany’s leading financial players – in ESG data firm Arabesque S-Ray.According to an interview with Eurex’s Deputy CEO Michael Peters on the Eurex website: “We are working on an extension of our product range to cover more regions and options to offer a broad and diverse ESG eco system on the Eurex platform.

“We have started to consult with investors on their need for more advanced ESG index concepts”

“Moreover, we have started to consult with investors on their need for more advanced ESG index concepts, for example, an ESG “Best in Class” futures contract.”

It says that market participants can expect further developments in the fourth quarter: options, further regions and more ESG focused index methodologies.

“It remains Eurex’s focus to provide market participants with efficient derivatives instruments to meet the requirement to incorporate ESG into their investment strategies.”

The exchange said client demand – especially from the Nordic region – is strong.