MSCI’s (NYSE: MSCI) status as the one of the largest index providers and provider of indices to some of the most well-known, heavily traded exchange traded funds is benefiting the firm in another way: Increased derivatives activity on its various benchmarks.
During the just completed third quarter, over 9.3 million options and futures contracts were traded on MSCI indices.
“In the first nine months of the year, nearly 27 million contracts based on MSCI indexes traded globally, an increase of 11% over the same period in 2013. Open interest in MSCI index based listed futures and options was over 1.2 million contracts as of September 30, 2014, up 38% year on year,” according to a statement issued by the index provider.
The largest products based on value traded are the SGX MSCI Taiwan Index Futures and the ICE Futures US Mini MSCI Emerging Markets Futures, which recorded USD 413 billion and USD 327 billion respectively in value traded in the nine months to September 30, 2014, according to MSCI.
The firm’s emerging markets index is one of the most widely followed indices in the world and serves as the benchmark for the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), the second-largest emerging markets ETF by assets.
The iShares MSCI EAFE ETF (NYSEArca: EFA) is the largest ETF that tracks an MSCI index. MSCI indices also serve as the benchmarks for a plethora of other marquee ETFs, including theiShares MSCI Japan ETF (NYSEArca: EWJ), iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) and the iShares MSCI ACWI ETF (NasdaqGM: ACWI). [Low Vol ETFs Remain in Style]
“MSCI’s growing presence in this market as an index provider to exchanges around the world reflects the importance investors place on having the right tools to help them manage their portfolios effectively and efficiently,” said Baer Pettit, managing director and global head of MSCI’s index business, in the statement. “The record volumes we’ve seen in Q3 for listed futures and options based on MSCI indexes, together with our leadership position in the provision of indexes for global and offshore country derivatives, mean that MSCI is now a leading player in this market.”
“During the first six months of 2014, ETF investors directed a larger proportion of new funds into MSCI index-based ETFs than those of any other index provider, and ETF providers launched more new funds based on MSCI indexes than those of any other index provider. This market share data highlights both the appeal of MSCI indexes to global investors and the widespread adoption of the indexes by the world’s leading ETF providers,” according to a statement released by MSCI.