Activity in E-mini S&P 500 equal weight futures is on the rise, according to CME Group, which says it sees a big increase in derived blocks driving open interest to above 17,700 lots (over $2.7bn notional).
Derived block trades are large, privately negotiated trades in equity futures. In this case, the contracts enable investors to diversify beyond the largest mega cap stocks that heavily influence traditional S&P 500 futures. By giving equal weight, they provide a wider view of the market.
Prior to the recent shift, open interest was calculated at the 5,200 mark. CME notes that year-to-date average daily volume (ADV) has reached 760 lots, signalling growing demand for futures that provide more balanced exposure across the S&P 500 index.
Paul Woolman, head of equity products at CME Group, commented: “We’ve seen strong and growing demand for a broader view of US equities. S&P 500 Equal Weight futures help investors diversify their portfolios and manage the potential risks of a top-heavy index.”
