The Montreal Exchange (MX), a subsidiary of Toronto-based TMX Group Ltd., is expanding its interest rate derivatives offering with the launch of Canadian dollar interest rate swap futures.
The move is made possible as a result of methodology produced and owned by Chicago-based Eris Exchange LLC, which replicates over-the-counter swaps economics into a single futures price and allows the product to remain a futures contract throughout its lifecycle, according to an announcement released Wednesday.
"The innovative product design allows participants to operate within the familiar ecosystem of futures market regulations, back-office processes, agency execution and software tools," the announcement states. "Once launched, the contracts will follow Canadian interest rate swap market conventions and offer tenors of two, five and 10 years."
The new swap contracts will be cleared at the Canadian Derivatives Clearing Corp., also a TMX Group subsidiary.
"Regulatory reforms are transforming the interest rate swap market globally, with trading markets and clearing houses taking a larger role," says Alain Miquelon, president and CEO of MX and group head of derivatives for TMX Group, in a statement.
"By offering this innovative new product, the Montreal Exchange will provide market participants with a transparent and cost-efficient benchmark product to complement the Canadian interest rate swap market, while also improving price discovery across the Canadian yield curve," he adds.
The new swap futures contracts will be available for trading on the MX in September subject to self-certification of the product.