[ A D V E R T O R I A L ]
IDEM - Trade a market
with high potential
Nicolas Bertrand, global head of derivatives markets at London Stock Exchange
Group, reviews the position and potential of the Italian derivatives market.
T
he Italian derivatives market
has shown great resilience and
growth in the last few years. 2018 is
no exception to this.
Whilst trading activity in listed
derivatives in Europe has been
somewhat muted, IDEM’s leading
products are significantly up this
year: the FTSE MIB futures and
mini-futures are respectively up
12% and 20%, while FTSE MIB
options are up 36%. In aggregate,
IDEM has traded an average
notional amount of ¤5 billion per
day this year and reached an open
interest of 5.9 million contracts at
the end of August.
Local markets. Global attention.
We talk to a multitude of trading
firms, brokers and investors around
the globe and the need for diversi-
fication is emerging as one of the
top themes. The constant increase
of flow towards index-based prod-
ucts, particularly ETFs, creates
more competition and drives the
focus of active managers towards
performance. Indeed, active man-
agement still represents about 75%
of global assets under management.
So, any change regarding asset
managers’ investment approach
has a noticeable impact.
56 // TheTrade // Autumn 2018
What was evident during the
FIA’s International Derivatives
Expo in London this summer,
where I chaired a panel on inno-
vation and trends in derivatives,
was the interest in local products
and innovative solutions from Oslo
Børs, B3, MEFF, London Stock Ex-
change and Susquehanna, a leading
market making firm.
Growth. Diversification.
What is making the Italian market
and particularly IDEM, its deriva-
tives market, so interesting?
Last year Borsa Italiana saw one
of its best years for IPOs with 39
companies listed. Amongst these
was global automobile tyre maker,
Pirelli, the biggest IPO in Conti-
nental Europe and the third biggest
globally, raising nearly ¤2.4 billion.
In 2018, the small and mid-cap sec-
tor achieved great momentum as
proved by the growth of AIM Italia
with 114 companies listed to date.
Italy is also interesting from a
trading standpoint. The market
has always been more prone to
volatility bursts. The correlation
of the FTSE MIB to the European
benchmark has been 0.80 in the
last couple of years while other
indices such as the CAC40 or the
Nicolas Bertrand, global head of
derivatives markets, London Stock
Exchange Group
DAX30 hover around 0.95. The
FTSE MIB index is less correlated
to European equity benchmarks
and, therefore, an interesting
source of diversification.
Liquidity. Dynamism.
Interesting fundamentals do not
always lead to trading activity. Exe-