Euronext today announced the impending launch of three spread contracts on agricultural commodities (subject to regulatory review).

Spread contracts are financially settled futures contracts whose underlying is a price difference between two different products, in this case two different futures. Trading in the spread contracts begins on October 14, 2024.

The three spread contracts are based on the following underlying products:

• Euronext Milling Wheat No. 2 Futures vs. CBOT Wheat Futures
• Euronext Milling Wheat No. 2 Futures vs. CBOT KC HRW Wheat Futures
• Euronext Milling Wheat No. 2 Futures vs. Euronext Corn Futures

For each spread contract, there are four expiration dates per year, covering the months of March, May, September and December. At launch, five expiration dates are available for trading, from December 2024 to December 2025.

USD-denominated versions of the two spread contracts, which are based on the price difference between wheat futures listed on Euronext and CME Group, will be introduced on the same day on the Chicago Board of Trade (“CBOT”) and will be subject to the rules of the Chicago Board of Trade (“CBOT”).

Until now, market participants had to trade the different futures contracts separately, executing a spread strategy in two inverse trades for each outright. The listed spread contracts introduced by Euronext allow financial investors and hedgers to execute a spread strategy in just one trade, bringing significant benefits:

• Reduce transaction costs because investors and hedgers no longer have to trade two different products, but a single contract.
• Reduce execution risks and avoid situations where only one of your orders is executed, exposing you to unwanted risk.
• Gain insight into or even avoid foreign exchange risks that arise when trading a spread strategy between CME Group and Euronext listed futures.
• Take advantage of margin efficiencies, as traders can expect lower margins on a spread contract than when trading each component individually, especially when the components settle on different exchanges.

Camille Beudin, Head of Diversified Services at Euronext, said:

“Euronext is delighted to announce the upcoming launch of spread contracts on agricultural commodities. As the first spread contracts ever listed on Euronext, they underline our commitment to constantly innovate our markets and enable our clients to implement their trading and hedging strategies.

This is further evidence of how Euronext can leverage its entire value chain with a trading and clearing presence, shortly after the migration of agricultural commodity clearing to Euronext Clearing in July 2024. This simpler, lower cost and less risky way of trading spreads between CME Group and Euronext is expected to attract more investors from different regions and will bring the American and European wheat trading communities closer together, bringing additional volume and liquidity to the Euronext markets.”