Continued from August 15

Another important opportunity for equity index derivatives exchanges like ICE is offering products that are customiseable, enabling investors to take advantage of contracts that reflect more accurately their specific investments.

Caramaschi said: “We are also getting requests for more futures on customised ESG and Climate indices. We could have taken the stance that we are only going to list futures on one ESG variant and that is the only product clients can use but, at the moment, everyone has their own definition of ESG/climate, so we have to accommodate for this.

“So, if clients want a future on a bespoke index because it perfectly matches what they are benchmarked to, we are happy to list futures on it. A prime example is our recent launch of ICE MSCI Low Carbon Target Core Index futures, this was client led and we have already had trades in these contracts.”

There is a lot of talk about the prospects for ESG index derivatives but the truth is - trading of these products remains light compared with the parent contracts.

Caramaschi said it is “still early days” for ESG and climate fund futures but she is bullish: “Driving us is the demand that we are seeing from the Nordics and from North America, specifically Canada. There are asset managers who are mandated that if there is an ESG variant on an index, they must trade that so we want to ensure we can facilitate this business. At the end of the day, we are only here to provide risk management tools and, if there is client demand, we will deliver.”

ICE Futures Europe launched on June 26 futures on the FTSE 100 ESG Risk Adjusted Index and the FTSE All Share Risk Adjusted Index, new indices from FTSE Russell and the first ESG variants for the benchmark UK indices.

An interesting opportunity for ICE is its FTSE Total Return Future, the group’s first total return future launched in November last year, some 18 months after Eurex made available its own FTSE 100 TRF.

Caramaschi said: “It is more capital efficient to trade the FTSE TRF on our market because we have a huge pool of open interest in FTSE 100 futures and options which offers 90% offsets to the FTSE TRF positions. TRF are still fairly new products so there’s an element of educating customers as to the benefits that they can get from trading on our market. We also have a fee holiday in our FTSE TRF that will last to the end of the year and we do not charge maintenance fees.”

Much has been made in the US of the retail trading revolution that started in the COVID lockdowns and manifested into the meme stocks phenomenon, leading US exchanges such as CME to launch more smaller versions of their flagship contracts aimed at retail traders.

But Caramaschi is sceptical whether those types of products make as much sense in Europe. She said: “We had a mini-FTSE future many years ago which was largely targeted at retail and it didn’t really trade. We have to ask: “If we list a micro future on say the FTSE 100, are we going to get new business or are we fragmenting liquidity in an established product? The last thing we want is to fragment liquidity?”.

She added: “There are some successful micro futures, mainly in the US, but most outside the US are currently just churning volumes with no meaningful open interest growth. Is this adding value to the market? We are watching the micro futures space closely but at the moment I don’t think there is real demand for a micro future on the FTSE 100 Index, however if this changes we are always willing to accommodate.”

Caramaschi’s second year in the role will surely be less fraught than her first but she will busy, managing the various challenges and opportunities faced by two of ICE’s core markets.