Eurex is set to launch dividend futures on the constituents of the Dow Jones EURO STOXX 50 from January 11, 2010. Eurex is introducing these products to enable investors to hedge or trade the dividends that are announced and paid by the individual index constituents in each year.
According to Eurex, the separate exchange listing of this dividend element will improve possibilities for risk management and increases transparency on one of the fundamental elements determining a shares value.
Eurex has added that it would initially introduce dividend futures on 25 of the constituent components of the Dow Jones EURO STOXX 50. Hence, investors can manage their exposure to the 2010 dividend period. Eurex will offer annual contracts in each name from December 2010 out to December 2014 that will settle to the value of the dividends paid in the annual period to that date.
With the introduction of the dividend futures, Eurex aims to work closely with the current market participants and to attract new entrants to the asset class.
Peter Reitz, member of the executive board at Eurex, said: “The listing of our new single stock dividend futures reflects the demand by investors for exchange-traded and centrally cleared products. With these new instruments investors can participate in the performance linked to the dividend element of a share and equity derivates trader can hedge against a substantial component of their risk. The growing interest in dividend products has already been demonstrated by the very positive response to our listed index dividend futures.”
