Eurex is looking at reviving its MSCI dividend futures and extending its total return futures coverage to include some of the other indices whose futures are traded at the German exchange.

Speaking to FOW as Eurex launched on Monday its first MSCI total return futures, Stuart Heath, the director of product design for equity and index derivatives at Eurex, said his team is looking at expanding further the exchange’s coverage in dividend and total return futures.

Heath (pictured) said: “As you’ve seen with the EuroStoxx suite, we have futures, total return futures and dividend futures which all form part of the product suite, so we think there would be renewed interest in MSCI dividend futures but MSCI indices are slightly different in that they are global and they have such a large number of indices, the impact of an individual dividend is less. That said, emerging markets and EAFE have a lot more dividend influence in those indices.”

Eurex offers index, dividend and total return futures based on the Euro Stoxx 50 and they have proved popular with hedge funds keen to have different tools to trade the main European blue chip index.

Eurex launched futures based on three MSCI dividend indices in late 2019 but they do not currently trade though Heath sees Monday’s launch of MSCI total return futures as potentially generating more interest in other MSCI products.

He said of the MSCI offering: “Total return futures is probably going to be where the initial interest is and then, at a second stage, we will look to re-attract market-making to the dividend products as well.”

Heath said his team is also looking at total return futures on some of the other popular indices whose derivatives are traded at Eurex.

“The open interest in the Stoxx 600 product has grown significantly, particularly on the options side, so Stoxx 600 is becoming a real benchmark that could be used for hedging opportunities so that is in our plan for total return futures.”

Heath added: “Due to its structure, dividends are already rolled into the DAX index so it might not be as attractive for a total return product though there are other indices such as Swiss Market Index (SMI) for example that could be more interesting.”

The open interest in the Eurex Stoxx Europe 600 futures contract rose 8% last year to 492,000 lots while the open interest on the related options contract jumped 166% to 437,000 contracts at the end of last year, according to the exchange.

Frankfurt-based Eurex launched on Monday its first MSCI total return futures on the same day as ICE Futures US made available its first TRFs based on the key global indices.