Eurex, the electronic derivatives market, has launched the first series of index contracts in Europe.

Both equity and credit derivatives markets have grown dramatically in recent years, aided by demand for tools to hedge exposure to underlying investments and the increase in the number of investors who want to take two-way directional bets on securities, such as hedge funds and proprietary trading desks. But investors have not been able to trade equity volatility futures on an exchange in Europe until Monday.

Eurex, which is owned by Deutsche Börse and the SWX Swiss Exchange, launched implied volatility contracts for German, Swiss and pan-European equity markets.

“The new products (offer) market participants access to volatility as an independent asset class,” said Rudolf Ferscha, chief executive of Eurex. “They allow Eurex participants to take advantage of discrepancies in volatility within the European equity markets, to implement new trading strategies and to hedge their portfolios against volatility fluctuations.”

Dharmendra Patel, equity derivatives strategist at Goldman Sachs, which worked with Deutsche Börse on setting up the volatility index family, said investors wanted a European version of the U.S. Vix index, which made the starting point for the new contracts.

“We expect both traditional money managers and hedge funds to trade the new contracts,” said Patel. “Many institutional investors, particularly on the continent, prefer to trade futures on an exchange. A lot of hedge funds have a greater need for sophisticated hedging tools.”