StoneX and Cotlook to Launch New OTC Cotton Derivatives

The exclusive Cotlook license supports a planned expansion of StoneX’s cotton risk-management offering.

Rhea-AI Summary

StoneX (SNEX), through subsidiary StoneX Markets, has entered an exclusive licensing agreement with Cotlook to launch over-the-counter cotton derivatives.

The first planned product, the Cotlook Brazil Basis Swap, will reference the Brazilian component of the Cotlook A Index. StoneX says the derivatives will help cotton market participants hedge basis risk, the price exposure associated with differences between market prices and a benchmark.

Positive

• Minor point. Forward-looking: it has not happened yet and may not happen.Exclusive licensing agreement with Cotlook supports StoneX’s planned launch of cotton derivatives.

Negative

• None.

Key Terms

otc derivatives, basis risk, basis swap

3 terms

otc derivatives financial

"a new suite of OTC cotton derivatives"

Over‑the‑counter (OTC) derivatives are private financial contracts—like swaps, forwards or options—made directly between two parties instead of through a public exchange. They matter to investors because these deals are highly customizable (like tailoring a suit) but carry greater credit and liquidity risk: the other party might not perform and it can be hard to sell the contract, so OTC positions can amplify gains or losses and affect a firm’s financial health.

basis risk financial

"manage basis risk associated with non-US cotton exports"

Basis risk is the chance that a hedge or offsetting position will not move exactly opposite to the investment it’s meant to protect, leaving a gap between expected and actual results. Think of buying insurance that covers storm damage but not flood damage: if the wrong part of the risk changes, an investor can still face gains or losses even after hedging, so measuring and managing basis risk affects how effective a protection strategy really is.

basis swap financial

"The first product developed under the partnership will be the Cotlook Brazil Basis Swap"

A basis swap is a contract where two parties trade interest payments tied to different floating reference rates or markets, so each pays the other based on a different benchmark. It matters to investors because it lets companies and funds manage the risk that the gap between benchmarks will widen or narrow—like swapping two recipes that use different units so both cooks get predictable results—and can affect borrowing costs, valuation and hedging effectiveness.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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The new suite of OTC derivatives will help cotton market participants manage basis risk associated with non-US cotton exports

NEW YORK, Oct. 01, 2026 (GLOBE NEWSWIRE) -- StoneX Markets LLC ("SXM"), a subsidiary of StoneX Group Inc. (NASDAQ: SNEX), has entered into an exclusive licensing agreement with Cotlook to launch a new suite of OTC cotton derivatives, designed to help market participants manage risk in an increasingly globalised cotton market. The first product developed under the partnership will be the Cotlook Brazil Basis Swap, a new risk management tool referencing Cotlook’s internationally recognised cotton pricing benchmarks.

The launch comes amid a major shift in global cotton trade flows. Brazil overtook the US as the world's largest cotton exporter in the 2023/24 season, cementing its position as a key supplier to Asian textile manufacturers and an increasingly important influence on global pricing. As Brazil's role has grown, so has the need for more effective risk management solutions.

The first OTC cotton derivative will reference the Brazilian component of the Cotlook A Index, helping farming cooperatives, merchants, mills, manufacturers and other cotton market participants better manage and hedge risk. Designed with the needs of the cotton supply chain in mind, it represents a significant enhancement to the tools available for managing price exposure.

Antonia Prescott, Managing Director and Editor, Cotlook, commented:

“The collaboration with StoneX is an important evolution in our longstanding mission to bring price transparency to the international cotton industry. We are pleased to be working with StoneX to create a valuable instrument for our customers to actively mitigate the full composition of their price risk.”

Brett Phillpott, Global Co-Head of Commercial Hedging & Commodities, StoneX, added:

“Our customers in the global cotton industry have long sought the ability to manage the basis risk inherent in their international cotton supply chains. These OTC derivatives will allow them to hedge a significant portion of their price risk that was previously unhedged.

“By working with Cotlook, we are enabling our clients to leverage a well-established benchmark to strengthen their risk management capabilities and improve forward price transparency for the market.”

About Cotlook

Cotlook Ltd is an independent UK-based company that has been engaged in publishing cotton prices, news and market analysis for over 100 years. It has a worldwide reputation for accuracy and impartiality, and its price information is trusted and used by government institutions in the US, China and elsewhere, as well as by international trading companies and other major cotton organisations. www.cotlook.com

About StoneX

StoneX Group Inc., through its subsidiaries, operates a global financial services network that connects companies, organisations, traders, and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high-touch service, and deep expertise. The company strives to be its clients' trusted partner, providing its network, products, and services to help them pursue business opportunities, manage market risks, make informed investment decisions, and improve their business performance.

A Fortune 50 company headquartered in New York City and listed on the Nasdaq Global Select Market (NASDAQ: SNEX), StoneX Group Inc. and its more than 5,400+ employees serve over 80,000+ commercial, institutional, and payments clients, as well as more than 260,000 retail accounts, across more than 80 offices on six continents. Further information is available at www.stonex.com/en/

Media enquiries:

Marion Rannard, Senior Communications Specialist
marion.rannard@stonex.com
media@stonex.com

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FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What cotton derivatives are StoneX and Cotlook planning to launch?

The first planned product is the Cotlook Brazil Basis Swap, referencing the Brazilian component of the Cotlook A Index. It will be developed under an exclusive licensing agreement between StoneX Markets and Cotlook for a new suite of over-the-counter cotton derivatives.