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Nasdaq (NDAQ) Unveils Nordic Gross Return Futures Contracts

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Nasdaq, Inc. (NDAQ - Free Report) introduced the Nordic Gross Return Futures contracts in a bid to assist investors in managing dividend risk. These became available for trading on Nov 17, 2020.

Nasdaq lists stock futures & forwards on Swedish, Danish, Norwegian & Finnish shares. Nasdaq Derivatives Markets lists stock futures on over 100 underlying shares. Gross Return Futures and Forwards (GRFs) are listed on the same underlying stock classes as regular stock futures and forwards. GRFs are adjusted for all dividends (price reduction of gross dividend amount) that are paid during the lifetime of the contract.

In this present situation of economic uncertainty due to the COVID-19 outbreak, demand for trading stock derivatives products, excluding dividend risk, has increased among institutional investors.

These newly launched contracts are suitable for synthetic equity exposures, reflecting the actual performance of the stock without any implied dividend risk. This enables investors to manage the dividend risk.

Gross Return Futures are considered a valuable addition to Nasdaq’s product portfolio as they provide new opportunities for investors and mitigate risk through derivatives trading. Apart from managing dividend risk, the new Gross Return Futures boosts Nasdaq´s efforts to fortify its presence in the Nordic derivatives markets. Nasdaq Nordic offers trading and clearing of a large variety of options, futures and forwards based on Swedish, Danish, Finnish and Norwegian stocks and indices.

In September 2020, Nasdaq launched Mini Futures on OMXS30 to provide an affordable way for market participants to gain access to the most actively traded benchmark index in the Nordic region. Further, investors will get the opportunity to manage risks while further adding to liquidity. These new contracts are based on OMXS30, which is the leading share index of Stockholm Stock Exchange and consists of the 30 most actively traded stocks on Nasdaq Stockholm in the Nordic region.

Also, Nasdaq currently has a market share of 80% in single stock options and nearly 25% in index contracts in Norway.

In Europe, Nasdaq offers trading in derivatives, such as stock options, futures, index options and futures. Its Index business continues to demonstrate strong resilience and growth due to continued growth in the volumes of Nasdaq-listed futures. Higher volumes of futures trading enhance the index’s revenues, which is one of the important components of the Information Service segment. Revenue growth at this segment increased at a two-year (2017 – 2019) CAGR of 15.1% and the momentum continued in the first nine months of 2020 as well with 36.7% growth in index revenues.

Nasdaq recently announced the launch of two new licensed index futures contracts, the Nasdaq-100 Volatility Index (VOLQ) and the Nasdaq Veles California Water Index (NQH20) to enhance its Index business.

Shares of this Zacks Rank #3 (Hold) stock have rallied 16.1% in the past year against the industry’s decline of 3.2%. Solid fundamentals should help the stock retain the momentum.

Stocks to Consider

Some better-ranked stocks from the finance sector include MarketAxess Holdings (MKTX - Free Report) , PJT Partners (PJT - Free Report) and Mvb Financial (MVBF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MarketAxess surpassed estimates in each of the last four quarters, with the average earnings surprise being 2.71%.

PJT Partners surpassed estimates in two of the last four quarters, with the average earnings surprise being 42.38%.

Mvb Financial surpassed estimates in two of the last four quarters, with the average earnings surprise being 210.55%.

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