The Nasdaq OMX Group, Inc. announced plans Wednesday to introduce options trading on U.S. Treasury securities, which will allow investors to more precisely hedge interest rate risk.
The exchange plans to launch trading in the new derivatives on its options exchange, the Nasdaq OMX PHLX, on February 19, in co-operation with BNY Mellon.
It says that the derivatives will provide access to new trading and investing vehicles that allow investors to hedge interest rate risk with more precision, and that it will bring derivatives trading on U.S. Treasuries to fixed-income investors seeking capital efficiency, transparency and mitigated counterparty risk because of centralized clearing of options contracts.
“Ten-year notes and thirty-year bonds, are the most heavily traded securities within the fixed income market, and listing options on U.S. Treasuries on our exchange will bring direct market access to global investors,” said Eric Noll, executive vice president of transaction services U.S. and U.K. at Nasdaq OMX.
“It is mission critical for Nasdaq OMX to offer our member firms opportunities within new asset classes and new structures that improve market quality. This partnership will provide investors with an additional level of transparency, deeper liquidity and improved execution efficiency to this new asset class,” Noll added.