Economic derivatives--used to take a view on forthcoming data releases or hedge market reaction to data news--are catching on, said Richard Rosenberg, global head of economic derivatives at ICAP. Speaking on a panel about innovations, he said the instruments have existed for some years, but received a boost when the Chicago Metals Exchange started clearing trades in September.
The instruments can be vanilla or digital options or forwards on data releases such as European inflation or non-farm payrolls and are bought through an auction process, run by ICAP. Plans are afoot to launch a U.S. CPI auction this spring, and other instruments will likely follow as interest builds, said Rosenberg.
