The long awaited 20 year bond futures contract made its debut on the Australian market this week and volumes were relatively light when compared to trading volumes in the longstanding 3 year and 10 year contracts. The new contract was first announced in May this year.
The Australian government had taken advantage of record low interest rates to issue long dated bonds out to 2037 and the Sydney Futures Exchange followed suit with the first new major bond contract in over 20 years. In May this year, the head of the Australian Office of Financial Management, Rob Nicholl, pointed to the body’s strategy of lengthening the government’s maturity profile in a move that has been warmly welcomed by the market. Long dated bonds and futures are seen as of offering better hedging and product pricing opportunities for life offices, insurers, mortgage providers and traders. The new 20y bond futures contract will trade under the code “XX”. For more information click here.