The InterContinental Exchange has unveiled a new interest rates futures contract designed to facilitate term financing agreements such as repo deals. The contract is called ICE Funds Rate and is offering a transparent look at the interest rate funding markets in a number of currencies.
A patent protection process has been started to designate the contract as a unique product. The solution is developed by trading firm DRW, with the pricing of the contracts resembling a zero-coupon bond.
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ICE is aiming to bring the contract to the market in the latter part of this year after regulatory approval. The exchange has also established an advisory committee which includes financial institutions, liquidity providers and subject matter experts in order to facilitate the launch.
The product will join a growing list of interest rates futures contracts that ICE is already offering that include US treasures, UK guilts, German bunds, eurodollar contracts, LIBOR rates and others.
The exchange is already offering broad coverage of both sovereign and inter-bank yield curves in the U.S. and Europe. ICE’s is also not limited to particular time frames and provides access to a broad spectrum across short-term, medium- and long-term rates. All interest rate contracts are cleared at ICE Clear Europe, which permits substantial capital efficiencies.