CME Group, a diverse derivatives marketplace, and Dow Jones Indexes have launched Dow Jones CME FX$INDEX. The index will serve as the basis of a new futures contract.
According to the CME Group, the new index combines six currency futures and represents the relative value of the US dollar versus six currencies that include the Australian dollar, British pound, Canadian dollar, Euro, Japanese yen, and Swiss franc.
The new index is expected to launch in the third quarter 2010. The contracts will be listed with, and subject to, the rules and regulations of CME.
Michael Petronella, president designate of Dow Jones Indexes, said: “This new currency index leverages Dow Jones Indexes’ capabilities and CME Group’s distribution experience and leading role in currency futures. The methodology as developed by CME Group includes currency-weighting of the index to reflect the economic realities as indicated by current Fed data, which makes the index a suitable strategic hedging instrument for market participants.”
Derek Sammann, managing director of FX and interest rate products at CME Group, said: “This new contract provides an easier way for customers to more precisely and conveniently lay off global currency risk with a single index. Additionally, portfolio managers can dynamically hedge their positions against the index using the six most liquid currency contracts traded at CME.”