CME Group, a global markets company, has reported that its newly launched Treasury Bill (T-Bill) futures trading activity exceeded 6,000 contracts in its first week. The futures align with the growing risk transfer activity in the U.S. Treasury market. CME Group announced that these contracts will soon be eligible for portfolio margining against other cleared interest rate swaps and futures.

CME Group launched its T-Bill futures on October 2. The company's existing suite of highly liquid U.S. Treasury futures has experienced significant growth, reaching an open interest of $2.4 trillion in 2023, marking a 49% year-over-year increase. The average daily volume for these futures has hit a record of 5.4 million contracts year-to-date.

T-Bill futures have garnered interest from over 25 market participants, evenly distributed between market-makers and users. These cash-settled futures are based on the 13-week U.S. Treasury Bill auction discount yield.

"In just one week, it is clear that clients are turning to our new T-Bill futures to hedge against the yield risk of 13-week U.S. Treasury securities," said Agha Mirza, CME Group Global Head of Rates and OTC Products. "With more investors gaining exposure to short-term U.S. government debt, T-Bill futures can provide a capital-efficient risk management tool with opportunities for inter-commodity spread trading and margin offsetting."

Financial institutions such as J.P. Morgan and DRW have expressed excitement about participating in the new T-Bill futures contracts. Eric Birenberg, Head of Short Duration Rates Trading at J.P. Morgan, stated, "Trading in spreads between SOFR futures and T-Bill futures will be an important tool in the toolkit, helping us efficiently hedge our risk in the asset class and provide greater liquidity to our clients." Andrew Hennelly, DRW Co-Head of Global Treasury, also expressed support for the development of trading in CME Group T-Bill futures.

CME Group's successful launch of T-Bill futures and the strong trading activity in its first week highlight the growing demand for risk management tools in the U.S. Treasury market. These futures provide investors with a capital-efficient way to hedge against yield risk and engage in inter-commodity spread trading.