Montreal Exchange to Launch FTSE Canada Bank Credit Index Futures

Rhea-AI Summary

The Montreal Exchange (MX) has announced plans to launch FTSE Canada Bank Credit Index Futures (CBC) in Q1 2026, marking a pioneering development in credit derivatives. This innovative product, based on the FTSE Canada Bank Credit Spread Index, is specifically designed to isolate credit spread components of Canadian Bank bond portfolios. The CBC contract will offer market participants direct exposure to Canadian bank sector credit risk through a transparent and capital-efficient listed product. Key benefits include targeted credit exposure through a liquid bond index, expanded yield curve access, efficient hedging capabilities, and versatile trading strategies. The product was developed in collaboration with FTSE Russell and the Canadian Fixed Income Forum, aiming to repatriate credit hedging from the U.S. market and facilitate easier access for international investors.

Positive

• First-of-its-kind credit derivatives product in Canada offering unique market exposure
• Provides capital-efficient and transparent solution for managing Canadian bank credit risk
• Developed in partnership with established institutions (FTSE Russell and Canadian Fixed Income Forum)
• Potential to attract international investors and repatriate credit hedging from U.S. markets
• Complements existing fixed income instruments with additional trading flexibility

Negative

• Launch is subject to regulatory approval
• Implementation timeline extends to Q1 2026, indicating a lengthy wait for market access

A first-of-its kind credit derivatives product that allows market participants to manage specific Canadian credit risk

Toronto, Ontario--(Newsfile Corp. - June 17, 2025) - The Montréal Exchange (MX), Canada's derivatives exchange, today announced its intention to introduce the FTSE Canada Bank Credit Index Futures (CBC)*, a first-of-its kind credit derivatives product designed to meet the evolving needs of market participants, slated for a Q1 2026 launch.

Based on the FTSE Canada Bank Credit Spread Index, the contract isolates the credit spread component of a portfolio of Canadian Bank bonds. This provides transparent, flexible and direct exposure to Canadian bank sector credit risk, which gives participants another tool to manage credit exposure. This newly created, innovative index - designed to reflect the Canadian bank credit market - will serve as the Futures contract underlying and is now available to participants.

"Developed in collaboration with FTSE Russell and the Canadian Fixed Income Forum, our credit spread futures will complement our current yield curve futures, generating greater value for our clients," said Robert Tasca, Managing Director, Derivatives Products and Services, Montréal Exchange. "This expansion offers Canadian and international firms the transparency of a capital-efficient listed product to better manage their credit exposure."

The CBC contract will be designed to complement existing fixed income instruments, like cash bonds, exchange-traded funds and total return swaps, while offering distinct benefits, such as:

• Targeted Credit Exposure: Gain direct exposure to the credit spread of Canadian banks through a futures contract built on a representative and liquid bond index.
• Expanded Yield Curve Access: Add new liquid points to the Canadian-listed yield curve, enhancing curve construction and trading precision.
• Efficient Hedging Tool: Manage spread risk, portfolio duration and liquidity needs with a standardized, exchange-traded solution.
• Versatile Trading Strategies: Implement tactical credit views, replicate synthetic long/short credit positions, or execute relative value trades.

"We're excited to be working with the Montréal Exchange to offer Canadian credit spread futures to the market," said Marina Mets, Head of Americas, Fixed Income and Convertibles at FTSE Russell, an LSEG business. "We're committed to fostering evolution in the markets we serve, and our newly launched FTSE Canada Bank Credit Spread Index further promotes our position as a leader in fixed income and multi-asset index solutions."

"The CAD credit future was born from a working group of the Canadian Fixed Income Forum (CFIF), a Bank of Canada sponsored committee," said Karl Wildi, Managing Director and Vice-Chair, Global Markets, CIBC Capital Markets and CFIF member. "The idea was to create a liquid, standardized beta credit product for use in the Canadian market. The concept was to create a product that could repatriate credit hedging that had migrated to the U.S. market, facilitate easier access to Canadian credit exposure for international investors, and provide a liquid product for portfolio managers to manage core Canadian credit risk."

For more information on FTSE Canada Bank Credit Index Futures, please visit m-x.ca/cbc.

*subject to completion of the applicable regulatory process

About TMX Group (TSX:X)

TMX Group operates global markets, and builds digital communities and analytic solutions that facilitate the funding, growth and success of businesses, traders and investors. TMX Group's key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montréal Exchange, Canadian Derivatives Clearing Corporation, TSX Trust, TMX Trayport, TMX Datalinx, TMX VettaFi and Newsfile, which provide listing markets, trading markets, clearing facilities, depository services, technology solutions, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across North America (Montréal, Calgary, Vancouver and New York), as well as in key international markets including London, Singapore and Vienna. For more information about TMX Group, visit www.tmx.com. Follow TMX Group on X: @TMXGroup.

For more information please contact:

Catherine Kee
Head of Media Relations
TMX Group
416-671-1704
catherine.kee@tmx.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/255744

FAQ

When will the Montreal Exchange launch the FTSE Canada Bank Credit Index Futures (CBC)?

The Montreal Exchange plans to launch the CBC futures in Q1 2026, subject to regulatory approval.

What is the purpose of the new FTSE Canada Bank Credit Index Futures?

The CBC futures are designed to provide direct exposure to Canadian bank sector credit risk and allow market participants to manage credit exposure through a transparent, capital-efficient listed product.

Who are the key partners involved in developing the CBC futures?

The product was developed in collaboration with FTSE Russell and the Canadian Fixed Income Forum, with support from the Bank of Canada.

What are the main benefits of the CBC futures contract?

Key benefits include targeted credit exposure, expanded yield curve access, efficient hedging capabilities, and versatile trading strategies for implementing tactical credit views.

How will the CBC futures impact the Canadian credit market?

The product aims to repatriate credit hedging from the U.S. market, facilitate international investor access to Canadian credit exposure, and provide portfolio managers with a liquid product for managing core Canadian credit risk.