Italian Derivatives Market (IDEM): A Comprehensive Guide to Its Functioning and Importance
Explore the Italian Derivatives Market (IDEM), a vital segment of Borsa Italiana, enabling futures and options trading on key European indices, equities, and commodities.
Definition: The Italian Derivatives Market (IDEM) is a Milan-based exchange dedicated to futures and options trading on a variety of financial instruments including indices, stocks, and commodities.Gordon Scott brings over two decades of expertise as an investor and technical analyst, holding the prestigious Chartered Market Technician (CMT) designation.
What Is the Italian Derivatives Market (IDEM)?
The Italian Derivatives Market, known as IDEM, operates out of Milan and functions as a specialized derivatives exchange. It forms an integral part of Borsa Italiana—the Italian Stock Exchange—which is under the ownership of the London Stock Exchange Group. IDEM facilitates trading in futures contracts linked to indices, equities, and commodities such as electricity, including smaller-sized mini contracts. Over recent years, IDEM has experienced consistent growth in trading volumes, attracting both local and international investors.
Understanding the Structure and History of IDEM
Borsa Italiana's origins trace back to the early 19th century, established to succeed the former Borsa di Comercio. The Italian government inaugurated the IDEM in 1994 to foster derivatives trading. By 1997, IDEM and the Italian Stock Exchange underwent privatization, transitioning control to Borsa Italiana, a private entity owned by the London Stock Exchange Group (LSE). This group now oversees the management and operations of both IDEM and the broader Italian Stock Exchange.
Clearing services for IDEM are provided by Cassa di Compensazione e Garanzia (CC&G), also a member of the London Stock Exchange Group. With an average daily trading volume of around 200,000 contracts, IDEM ranks among Europe’s leading derivatives exchanges. Its primary focus lies in options and futures instruments.
Operational Details of the Italian Derivatives Market
IDEM functions Monday through Friday, operating from 8:00 a.m. to 8:00 p.m. Central European Time (CET), with pre-market trading starting at 7:45 a.m. and post-market sessions extending until 10:00 p.m. All trades are conducted in euros. The exchange connects over 80 members across Europe directly, supported by more than 20 active market makers.
The exchange predominantly trades derivatives on the FTSE Milano Indice di Borsa (FTSE MIB), Italy’s premier stock market index. The FTSE MIB represents approximately 80% of Italy’s domestic market capitalization and tracks 40 leading Italian companies.
IDEM’s product lineup includes FTSE MIB Index futures and mini-futures, FTSE MIB Dividend Index futures, as well as both standard and weekly FTSE MIB Index options. Additionally, it offers futures and options on Italian and Pan-European single stocks.
The market is divided into two main segments: IDEM Equity, which handles index and single-stock futures and options for Italian and Pan-European securities; and IDEX, focused on Italian power futures and derivatives related to commodities and associated indices.
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