Financial Innovation Blooms in the Credit Sector
In the ever-evolving world of securities markets, a significant development is on the horizon: the emergence of credit futures. A new newsletter, "The Future of Credit Futures," published by Crisil Coalition Greenwich, delves into this exciting topic, tracing the evolution of the credit futures market and examining its potential benefits.
The newsletter analyses the potential advantages that futures can bring to credit investors. Futures offer an efficient way to quickly adjust overall exposure to the credit market, hedge existing positions, or implement views on credit spreads. This efficiency is similar to the benefits derived from futures tracking other asset classes like equities and interest rates.
The study, conducted by Crisil Coalition Greenwich in June 2021, reveals that approximately 85% of U.S., U.K., and European credit investors are aware of credit futures and see potential benefits for their investment portfolios. The study also identifies educating trading desks as a critical factor for the growth of credit futures.
The newsletter is based on interviews with 41 credit investors in the USA, UK, and Europe. These institutional investors, such as asset managers, pension funds, hedge funds, and insurance companies specializing in credit markets, share their insights on the use cases for credit futures going forward.
One of the primary roadblocks to the adoption of credit futures has been the initial skepticism in the past. However, widespread adoption of new futures contracts can take time, and it seems that the credit futures market has become mainstream in the current market.
Regulatory rulings, the boom in credit ETFs, the growth of quantitative credit trading, and other market developments have created favorable conditions for a credit futures market. The benefits of such a market are undeniable, with study participants citing various beneficial uses for credit futures within investment portfolios, including tactical asset allocation and overlay management.
Looking ahead, the newsletter projects the future trajectory for the credit futures market. Kevin McPartland, Head of Research at Crisil Coalition Greenwich, predicts the growth of credit futures in the months ahead. As the market continues to evolve, "The Future of Credit Futures" newsletter will undoubtedly remain a valuable resource for investors seeking to understand and participate in this exciting new development.
In addition to its focus on credit futures, the newsletter also provides exclusive articles on securities markets, making it a must-read for investors and market enthusiasts alike. Whether you're a seasoned investor or just starting out, "The Future of Credit Futures" is a newsletter worth subscribing to for insightful analysis and valuable market insights.
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