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.


Background

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.

On March 21 of 2011, NYSE Liffe US launched Eurodollar futures.[1] Options on these futures were expected to be launched in fourth-quarter 2011.[2]l The launch coincided with the launch of New York Portfolio Clearing (NYPC), its clearing joint venture with DTCC.


Eurodollars


References

  1. NYSE Euronext Puts First US Rate-Futures Trades On The Books. Nasdaq.
  2. NYSE To Launch Interest-Rate Futures in Third Quarter. WSJ.com.