IntercontinentalExchange Group Inc., owner of the world's largest credit-default swap clearinghouse, is close to offering futures on the most active derivative indexes.
The new contracts will replicate the lineup of companies included in the investment-grade and high-yield swap indexes owned by Markit Group Ltd., according to a person with knowledge of the plan. ICE, as the company is known, failed in an earlier effort at credit-swaps futures that sought to give investors a way to bet on improving or deteriorating credit markets.
The move to create futures based on swaps has gained steam after the Dodd-Frank Act in the U.S. required most swaps to be backed by clearinghouses, which increases the cost of using the contracts. Futures are typically cheaper to trade than swaps as they require less cash and fewer securities to be held as margin. They could also be used by arbitrage investors who seek to exploit price differences between the swap and future.
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