ASX launches first Australian bond and credit index futures

ASX has launched Australia's first exchange traded bond and credit index futures, giving institutional investors a new way to manage exposure to the domestic fixed income market.

The contracts, launched in collaboration with Bloomberg Indices, are based on Bloomberg AusBond Composite Index (BACR0) and Bloomberg AusBond Credit Index (BACR0), which together are tracked by more than $60 billion in assets.

The Bloomberg AusBond Composite Index provides broad exposure to Australian fixed income, including government, semi-government, supranational and corporate bonds, while the Bloomberg AusBond Credit Index focuses on Australian corporate bonds.

The futures allow investors to manage fixed income exposure through a single instrument rather than buying or selling large numbers of individual bonds, potentially improving efficiency when hedging portfolios, managing liquidity or adjusting market exposure.

The contracts are cash settled against their respective Bloomberg AusBond indices and traded on ASX 24.

ASX acting group executive, markets Danial Sinclair said the launch represented an evolution of the exchange's interest rate derivatives offering.

"The launch of Bond and Credit Index Futures is an important evolution of ASX's interest rate derivatives offering and adds to the range of risk management tools available to market participants," Sinclair said.

He said the contracts would provide a transparent and efficient way for investors to access benchmarks already widely used across the intuitional market.

"By combining ASX's market infrastructure with Bloomberg's leading fixed income indices, analytics and global reach, we are delivering new opportunities for investors and are supporting the continued development of Australia's fixed income market," Sinclair said.

Fateen Sharaby, head of index derivatives, Bloomberg Index Services Limited, said the Bloomberg AusBond indices had long been important benchmarks for Australian fixed income investors.

"With this collaboration, ASX is bringing new exchange-traded tools to market that can help investors manage portfolios, hedge risk and access fixed income markets more efficiently," Sharaby said.

The contracts are aimed at banks, asset managers, ETF issuers, superannuation funds, proprietary trading firms and market makers.

The launch follows engagement with domestic and international market participants and comes amid growing demand for exchange traded fixed income and credit index products in offshore markets.