Last Updated on 11 September, 2023 by Samuelsson
In this article, we will list some of the most traded futures contracts in Europe. But let’s begin with some basics about futures and futures markets.
What are Futures Markets?
Futures markets are markets where futures contracts are bought and sold. A futures contract is an arrangement to buy or sell an asset at a certain point in the future at an agreed-upon price.
Nowadays most futures contracts that trade in exchanges are standardized agreements. These contracts are typically used by investors and speculators in their portfolio among other securities. The buyer is bound to buy and the seller agrees to sell the underlying asset of the futures contract at a pre-determined price, irrespective of the current market price at that time. The underlying asset may be a financial instrument or a tangible asset.
How Do Futures work?
Futures allow the holder to harness the wild price swings in the market. Usually, stocks, bonds, precious metals, grains, oil, and other power resources are the underlying assets of futures contracts.
The futures market is typically classified into two kinds of participants i.e. the hedgers and the speculators. The hedgers are the ones who are looking to stabilize their incomes and business operations and not necessarily looking to make profits. On the other hand, the speculators are there to make money out of future contracts and are usually not interested to gain ownership of the underlying asset.
Top Futures Contracts to Trade in Europe
Trading liquidity is an important aspect of futures trading. Trading itself is hard enough and you do not need to make it anymore harder by trading illiquid markets. Below is a list of some of the most traded futures contracts in Europe:
The Euro STOXX 50 Index is a market capitalization weighted stock index of the top 50 European companies. They include top, mid and small cap stocks in Europe. These futures were created with a view to give representation to blue chip companies in the Eurozone. The stocks in these futures are the most liquid ones. The index is available in many currencies such as Euros, USD, JPY, GBP, and Canadian dollars. This index is designed by STOXX and is owned by Deutsche Börse Group. Few top players included in this index are Total, Siemens, SAP, Bayer, Allianz, BASF Sanofi.
Trading Symbol: FSTX Euro-Bund
Euro-Bund is the long term German government bonds. These are interest-bearing futures issued by the German government with a remaining term of 8 and a half years to 10 and a half years. In the Euro currency zone, Euro Bunds are the most traded interest rate futures contracts. They have a minimum outstanding volume of 5 Billion Euros when it comes to their physical delivery. This future is traded on Eurex Exchange with a notional coupon rate is of 6%. It is one of the most popular contracts on the Eurex Exchange and a standard for the long term government debt in euros.
Trading Symbol: FGBL Crude Oil Brent
Crude Oil Brent is a major trading futures contract that tracks teh crude oil market. It is the light sweet light crude oil that is used as the benchmark price of the purchase and sale of oil all around the world. It was initially traded on the open outcry International Petroleum Exchange based in London. But since 2000, Brent crude oil is now traded on the Intercontinental Exchange. These contracts are quoted and traded in US Dollars. In addition to the Intercontinental Exchange, this future contract is also traded on NYMEX (New York Mercantile Exchange).
Trading Symbol: BRN Euro Bobl
Bobl is an abbreviation of “bundesobligationen”. This future contract is a debt issued by the German government and is used to trade medium-term German debt. It carries a notional value of €100,000 and is traded on the Eurex Exchange. German debt securities are the underlying deliverable for these future contracts. The remaining term on these is 4.5 yrs to 5.5 yrs with a coupon interest rate of 6%.
Trading Symbol: FGBM Euro Schatz
Euro Schatz is the futures that are short-termed as compared to the Euro Bund and Euro Bobl. The underlying deliverables are the German debt securities with a remaining term of 1.75 years to 2.25 years and it carries a coupon interest rate of 6%. This contract carries a notional value €100,000 and is among the most liquid derivatives traded in Europe.
Trading Symbol: FGBS 10-Year Long Gilt
The long gilt futures contracts are futures contracts with maturity durations of 8 yrs and 9 months to 13 yrs. Units of trading for these futures are £100,000 worth of notional gilt with a coupon rate of 4%. These are the bonds issued by the British government and are low-risk investment instruments with a lower yield rate and are equivalents to US treasury bonds. The long gilt bonds are issued by the HM Treasury and the payment on these are backed by the UK government credit.
Trading Symbol: R Euro-OAT Futures
These are the government bonds issued by the French Government and are the futures that are issued as long-term government debt with a coupon interest rate of 6% and a remaining term of 8.5 years and 10.5 years. They are issued to offer more diversification alternatives to the existing hedging instruments on the European Government debt. OT is the acronym for Obligations Assimilables du Trésor. These futures contracts are traded on the Eurex market with an original term of not more than 17years and a minimum outstanding value of 5 billion euros. These futures were introduced in 2012 to meet the demand for the risk-mitigating products to cater to the fear of France’s debt concerns.
Trading Symbol: FOAT DAX Index Futures
The DAX Index or the Deutscher Aktienindex (German stock index) is a total return index of the top 30 German blue-chip companies and their stocks. These futures are traded on the Frankfurt Stock Exchange. This index is an accumulation of top 30 German companies based on their order book value and market capitalization. The DAX index has two distinct but interrelated versions called the price index and the performance index. The equities used in this index are free float shares.
Trading Symbol: FDAX OMX Swedish Index
This index is one of the major futures that are traded in Europe. The futures contract trades on the Nasdaq Stockholm exchange in Sweden. There are two major indexes: OMXS 30 and OMXS 100. The OMXS30 is the capitalized weighed index of the 30 largest companies traded on the Nasdaq market, While OMXS 100 is he capitalized weighed index of top 100 companies on the Nasdaq OMX group exchanges. The OMX100 is made up of stocks across a wide range of sectors with major emphasis on innovation, technology, and growth.
The futures contract on this list tracks the OMXS30 equity index.
Trading Symbol: OMXS30 3- Months EuriBor Futures
EuriBor stands for Euro Inter Bank Offered Rate. It is an average representation of the estimate of the interest rates that the leading banks in the Eurozone charge when borrowing from other banks. EuriBor is only available in Euros and is traded in no other currency. A total of 44 Leading European banks daily submit their estimated interbank borrowing costs. The highest and lowest 15 % of the rates are not considered, while the remaining are averaged to determine the daily rate. These futures are administrated by the European Banking Federation.
Trading Symbol: FEU3
Where Can You Trade European Futures?
European futures can be traded through Interactive brokers, that offers trading on worldwide markets!