The two major credit derivatives index providers, TRAC-X and iBoxx, are both attempting to launch futures, but are attacking the project in opposite ways. iBoxx is setting up two consultative groups, one for dealers and one for investors, to come up with the ideal future, whereas Dow Jones Indexes, the administrator of TRAC-X, plans to leave the product development to licensed exchanges. Both groups have a similar timeframe, with iBoxx going for the first-half of the year and Dow Jones looking at either the June or September roll date for credit derivatives transactions. Neither, however, would name exchanges they might use or detail likely contract specifications.
Lars Hamich, executive director at Dow Jones Indexes, said, "We are not launching futures. We are licensing an exchange to do this." He said that in order to create the maximum liquidity the future must be seen as independent from any investment bank. "You wouldn't list something that other banks won't trade," he added.
ABN AMRO, Deutsche Bank and Citigroup are leading the development of the credit future, but they are trying to get the rest of the derivatives community to buy-in to the project to ensure it is liquid once it is launched, said Aurelia Lamorre-Cargill, director in over-the-counter derivatives structuring at Deutsche Bank in London.