Hedge Tool Planned For Latin Bonds

The Chicago Board of Trade is seeking approval to offer three new Brady bond indexes to its futures and options offerings.

"The idea of developing Brady bond indexes and contracts is to allow bank dealers and portfolio managers to hedge the sovereign risk that is related to those markets," said Sylvie Bouriaux, a senior economist at the board of trade. "There are no instruments available now that allow anybody to hedge

The application for the Mexico and Latin America indexes was submitted to the Commodities Futures Trading Commission on Nov. 29. An application for futures and options based on the Brazil Brady bond index will be submitted at a later date.

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