CME Sees Booming Demand for ESG Index Futures

    Stockholm (NordSIP) – Following their launch on 24 May 2021, and as investors look to diversify portfolios with sustainable products, the new S&P Europe 350 ESG index futures have become increasingly popular according to the CME Group.

    On 14 September, the exchange saw a record volume day for the S&P 500 ESG index futures of 18,075 contracts (over $3.4bn notional), surpassing the previous volume record in June 2021 of 12,500 contracts. This contributed to record Open Interest (OI) of 22,073 contracts ($4.2bn notional), also achieved on 14 September. There have also been inflows into the new S&P Europe 350 ESG index futures with 315 contracts trading, taking open interest up to 365.

    “As the ESG market continues to evolve, there is a growing client need for sophisticated forward-looking ESG products. The sharp uptick in open interest is indicative of the market’s desire for ESG instruments with a strong index methodology and flexibility. The S&P’s detailed ESG assessment methodology means that market participants can incorporate ESG equity derivatives as part of their sustainable investment strategies,” said Tim McCourt, global head of equity index and alternative products at CME Group.

    The increase in activity for both products adds to the continuing steep upward trajectory of open interest for CME’s equities ESG futures. Both instruments have high correlation to well-known benchmarks and have similar exposure and liquidity which can be easily transferred.

    The Chicago Mercantile Exchange (CME) Group, announced the launch the E-mini S&P Europe 350 ESG Index futures, at the end of April. The ESG Index futures are a targeted risk management tool aligned with ESG values that builds on the company’s successful E-mini S&P 500 ESG Index futures contract.

    Most recently, CME announced it will launch the derivatives industry’s first-ever Sustainable clearing service, to help market participants track and report on how their hedging activities are advancing their sustainability goals.

    Image by Gerd Altmann from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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