Euronext has started the year strongly in derivatives by passing a key milestone with one of its most successful recent products and launching a trading screen to revolutionise how firms interact with the European exchange group.

Euronext, which operates markets across Europe, said it passed on Thursday January 5 the one million lot milestone for its CAC 40 Total Return Future (TRF), an innovative product launched by Euronext in late 2018 to offer a cleared, lower margin equivalent of a total return swap.

Charlotte Alliot, head of institutional derivatives at Euronext, said the one million lots of TRF equates to more than €65bn (£57bn) of exposure and reflects the broad adoption of the contract.

She told Global Investor: “At the beginning, it was mainly banks trading the TRF, switching their over-the-counter index swaps exposure into the listing environment to take advantage of the margin efficiencies against the CAC40 future. However, more recently, we are seeing a growing presence on the buy-side. Initially it was the hedge funds but now we are seeing more interest from traditional asset managers.”

Euronext extended in October the maturity of the TRF to ten years from five years, partly to attract more flow from hedge funds, and the longer dated future started trading immediately.

Alliot said: “We are pleased with the client adoption of the contract, particularly with the asset managers, and we think this will continue with the extended maturities as this provides more opportunities, specifically for firms looking to trade the repo curve at different maturities.”

Looking ahead, Alliot is confident the one million milestone is only the first of many for the Euronext TRF: “With this contract, because of the clearing efficiencies, we had immediate traction. Now that the community of investors is growing and diversifying, I think there is going to be a positive liquidity effect on this contract.”

In parallel, the European group has been working behind the scenes on a new client interface for Euronext’s derivatives markets.

Alliot said the new GUI (Graphical User Interface) is being rolled out to clients, giving traders more dynamic access to Euronext’s portfolio of equity derivatives contracts.

She said: “As we have been developing our product range, mostly into the Delta One space with single stock futures, dividend futures and the TRF, the appetite for a new GUI has been growing and growing."

Alliot said Euronext has also customised the web-based browser to offer traders new features such as a TRF pricer.

She added: “Today, the whole portfolio of Euronext products is available on this GUI. We have just started to roll it out and there is demand from across our sell-side client base, from brokers to banks and market-makers.”

As well as offering new tools, the GUI has the potential to redefine how Euronext’s clients trade on the group’s many markets, according to Alliot.

She said: “For us it is important because we are completely transforming our distribution network. A successful exchange needs good products supported by a strong clearing house and clearing efficiencies but also a good distribution network. This GUI will sit on the client desktop and change how our clients interact with Euronext.”

Euronext said on Friday its equity index futures and options trading increased 12.2% to trade 64.3 million lots in 2022 but its single stock futures market saw a 55% drop in trading to 9.2 million lots, leaving full year volume in Euronext derivatives down 5.5% on the previous year at 178.7 million contracts.

Euronext is hosting in Paris on Thursday its first Euronext Markets Insight Conference which includes speeches from Euronext group chief executive Stephane Boujnah and former president of the European Central Bank Jean-Claude Trichet as well as panels featuring some of Europe’s top lawmakers and traders.

For more information on the Euronext Markets Insight Conference, please click here.