Market operator CME Group will expand its benchmark US Treasury futures and options offering with the addition of 20-Year U.S. Treasury Bond futures on March 7, pending regulatory review.
The new 20-Year US Treasury Bond futures will allow for delivery of original issue 20-year US Treasury bonds with remaining terms to maturity at delivery of at least 19 years 2 months and not more than 20 years.
Complementing CME Group’s existing suite of US Treasury futures and options, which it reported grew more than 15% year-over-year during 2021 to a record 4.5 million average daily volume. The firm expects 20-year US Treasury bond futures will offer greater efficiency and precision in managing exposure at the 20-year maturity point on the US Treasury curve.
“The introduction of a futures contract on the US Treasury’s 20-Year bond responds directly to market need for a hedging tool at a time when managing US Treasury market risk is more important than ever,” said Agha Mirza, CME Group’s global head of rates and OTC products. “Since the US Treasury began issuing 20-year bonds in May 2020, total issuance has been over US$450 billion, creating customer demand for a new product that establishes 20-year yield exposure. As a result, the design of this new contract represents extensive feedback from a wide set of clients and the broader fixed income trading community.”
The 20-year US Treasury bond futures will receive automatic margin offsets against existing interest rate futures upon launch and will be listed with, and subject to, the rules of the CBOT. Additionally, these contracts will become eligible for portfolio margining against other cleared interest rate swaps and futures shortly after launch.
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