Interdealer broker Tradition has announced the launch of Volatis, a new hybrid platform for trading realized variance pay-off Volatility futures of CME Group listed and cleared products. In its prepared statement, Tradition explained that “Volatis has been designed to facilitate improved Liquidity and access to the volatility market, along with greater pre- and post-trade transparency. “ The platform is being deemed a hybrid as it incorporates both voice and electronic negotiation of pricing along multiple asset classes. According to Tradition, this will provide the opportunity for trading “correlation spreads between realized and implied volatility.”
In the initial phase, Volatis will offer indications in block trades of cash settled futures contracts offered by CME Group exchanges on: NYMEX WTI crude, NYMEX Brent crude, NYMEX natural gas, COMEX gold, COMEX silver, and CME currencies EUR/USD, AUD/USD, GBP/USD, USD/JPY. Tradition explained that daily fixings are being provided by a recognized neutral market data provider, to ensure “an accurate reflection of realized volatility.”
Commenting on the product launch:
Rupert Hodges, CEO of Tradition FX, Energy and Equities said: “Volatis is the first platform that allows negotiation and subsequent clearing of realised volatility futures across asset classes with a variance payoff. The offering enables volatility exposure without the strike risk and complexity inherent in an options portfolio. It also gives access to increased trading opportunities which, in turn, means better hedging of your exposure to, or correlation trading against, implied volatility.” Hodges added: “The combination of focused technology tailored to users’ trading objectives and our experienced broking team means that the hybrid nature of the derivatives market is fully replicated to enable deeper liquidity and a smooth negotiation process.”
Derek Sammann, Senior Managing Director at CME Group said “this suite of futures products offers an innovative way for our customers and other market participants to manage their exposure to price movements across the currency and commodity markets. During periods of high volatility, when liquidity and counter-party risk can increase, CME Group’s variance futures provide a sophisticated new way for customers to hedge against systemic risk in a centrally cleared environment.”
