Deutsche Börse accused of speculating against French debt


Eurex, a subsidiary of Deutsche Börse, will launch on April 16 a new futures contract on French government bonds, a move that is drawing the ire of French Socialists who accused the German group of speculating on France's insolvency.

"By presenting a hedge against sovereign risk, the futures contract will actually allow investors to bet on the rise or fall of French bonds," the French Socialist Party said in a statement.

Deutsche Börse's new futures contract, they added, "may promote a self-fulfilling prophecy" and shows that Eurex "anticipates speculation against the French debt at a time when the pressure on the sovereign markets continue to escalate."

In a note, Eurex said its new long-term futures contract on French government bonds "complements" its existing offer and comes "in addition" to its futures contracts on German government bonds (Buxl, Bund, Bobl and Schatz futures) and short, mid- and long-term futures on Italian government bonds (Euro-BTP Futures), which were introduced since 2009.

"With the introduction of this new contract we are responding to the great interest shown among market participants in more customised hedging solutions," said Mehtap Dinc, Head of Product Development at Eurex. 

Both buy-side and sell-side firms have indicated significant interest in the new contract, Eurex said, including Barclays and Morgan Stanley.

Such futures contracts are indeed not new, the French Socialists said, and bear testimony to "the increasing fragmentation of the European capital market".

According to the Socialists, the new futures contract also further undermines the creation of Eurobonds that would mutualise European debt and shield individual countries against speculative attacks.

"Initiatives of private financial actors betting on increased economic differences between countries in the euro area must be combated," the French Socialists claimed.

Introduction of the new futures contracts will take place on 16 April, Eurex said.

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