Published on August 25, 2017

Fixed income market participants continue to grapple with cross currents stemming from geopolitics and central bank policies that appear to have limited easing potential. With equity markets cautious against a correction to protect the gains already posted in 2017, government bonds are seeing strong demand. This is particularly evident in the UK where Gilt 10-year yields have compressed from 1.32% to 1.08% since mid-July, 11 bps below its 2017 average of 1.19%.

We’re seeing market participants turn to Gilt futures to manage their portfolio risk

"With the market indicating diminishing prospects of policy tightening from the Bank of England over the short term, we’re seeing market participants turn to gilt futures to manage their portfolio risk. This demand continues to drive liquidity in the market, as evidenced by strong ADV growth and record open interest," says Chris Rhodes, Head of Interest Rates at ICE.


RISING LIQUIDITY IN LONG GILT FUTURES

Against the current political and economic backdrop, especially in UK markets, trading activity in ICE’s European interest rate complex is up more than 30% year to date. And there’s a heightened focus on ICE Long Gilt futures, where July ADV was up 11%, and today open interest stands at an all-time high, surpassing 1 million lots on 18 August.

ICE Interest Rate Highlights

  • Trading activity in ICE’s European interest rate complex up > 30% YTD
  • ICE Long Gilt futures open interest surpassed 1 million lots on 18 August

Long Gilt Futures Open Interest

Volume and Open Interest as of August 24, 2017

click image to enlarge

SUPPORT DIVERSE TRADING STRATEGIES WITH ICE GILT PRODUCTS

Our flagship ICE Long Gilt futures contract is the market benchmark for the 10-year segment of the UK government yield curve. With short, medium, long and ultra-long gilt futures, this suite of products offer a wide variety of trading strategies to a broad range of market participants looking to hedge their exposure to interest rates, or seeking to take advantage of anticipated interest rate changes.

Options on gilt futures complement the futures, offering even greater flexibility in managing portfolio risk and exposure to the UK government yield curve.