Eurodollar
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Eurodollars are financial instruments representing deposits of U.S. dollars held in banks outside of the United States. The Eurodollar futures contract reflects the London Interbank Offered Rate (LIBOR) for a three-month, $1 million offshore deposit. The contracts are often used as a means to take a view on Federal Reserve interest rate policies. They have long served as a benchmark interest rate for corporate funding.
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Background
The Chicago Mercantile Exchange developed and launched Eurodollar futures in 1981. Since then, Eurodollar futures have become the most actively traded futures contracts in the world.
The Euronext-owned Liffe (formerly the London Financial Futures and Options Exchange) launched a competing Eurodollar futures contract in January 2004. It was designed to complement Liffe's existing short-term interest rate (STIR) contract franchise comprising the EURIBOR and Sterling, Swiss Franc and Yen STIRS.
Eurodollar Futures and Options Contracts
Eurodollar futures, developed and launched by the Chicago Mercantile Exchange in 1981, were the world's first cash-settled futures contracts. Eurodollar futures and options are the most actively traded futures contracts in the world. The bulk of their volume is transacted on CME Group.
They also are offered for trading at SGX and on NYSE Euronext's LIFFE exchange in London.
