International derivatives market CME Group announced today that it will expand its interest rate pool with the addition of mortgage rate futures in January 2025, pending regulatory review.
“For the first time, market participants will have an accurate and highly efficient tool to manage risk in mortgage pipelines, servicing rights and securities,” said Agha Mirza, CME’s Global Head of Rates and OTC Group. “As the fixed income market continues to evolve, our new mortgage futures will allow clients to trade the prime-subprime spread and obtain unmatched margin offsets with U.S. Treasury futures, futures TBA and exchange contracts Eris SOFR’.
Mortgage futures are cash-settled contracts that provide immediate exposure to the most recent prime mortgage rate available to borrowers. The contracts are the first based on the 30-year Fixed Rate Conforming Optimal Blue Mortgage Market Index (OBMMI), which is designed to comply with IOSCO and tracks real-time rate lock data from more than a third of households in US mortgage origination.
Available for trading on CME Globex, the mortgage futures will be listed and subject to CBOT rules and cleared by CME Clearing. In addition to margin hedges against US Treasury futures contracts, shortly after the launch date, the contracts will be eligible for Exchange Cleared Portfolio Margin. CME Clearing currently provides more than $20 billion in daily margin performance across interest rate futures, options, cleared swaps and cash securities.