Options Market France

Options Market France, commonly abbreviated OMF and also known by the French name Organisation de Marches en France, was a French derivatives exchange and clearing institution active during the transformation of the Paris financial markets in the late 1980s. Its principal historical contribution was the creation of the EFX 50, the first continuously updated stock-market index associated with the Paris Bourse. The index tracked a basket of 50 of the most liquid French listed shares and was designed to provide a real-time measure of market movements rather than relying only on end-of-day calculations. OMF began publishing the EFX 50 in November 1987 in cooperation with the French bank CCF. The index was distributed through the Reuters network under the symbol EFX 50. Before its introduction, the French exchange published a daily trend indicator based on the closing values of 240 of the largest companies by market capitalization. The EFX 50 therefore represented a significant change in market information: it used transaction prices in the underlying shares and updated the indicator continuously during trading. In July 1988, OMF received authorization from the French Ministry of Finance to operate as a regulated futures and options exchange. On 21 July 1988, it launched a cash-settled futures contract on the EFX 50 together with an option contract on that future. Trading was conducted electronically through workstations located in the dealing rooms of exchange members. The exchange attracted major European, Japanese, and American banks, many of which also participated in the MATIF market for French government bond futures. Société Générale and BNP served as market makers for the EFX 50 futures contracts. OMF also performed clearing functions and acted as the clearing house for its contracts. A bank charter from the Bank of France enabled it to provide a framework for guaranteeing trades and supporting the settlement of transactions. Its operation consequently combined exchange, derivatives-market, and clearing-house functions at a time when French financial markets were becoming more electronic and internationally connected. The institution was subsequently absorbed into MATIF SA at the end of the 1980s. MATIF used the groundwork represented by the EFX 50 to launch the CAC 40 futures contract. The CAC 40 ultimately became the definitive benchmark for the French equity market and replaced the EFX 50 as the principal index reference. OMF is therefore best understood as a predecessor institution in the development of modern French equity-index derivatives rather than as a continuing consumer-facing brand.

Options Market France, known as OMF and in French as Organisation de Marches en France, emerged as part of the modernization of France's securities and derivatives markets during the late 1980s. Its activity centered on the Paris Bourse and combined the operation of a futures and options market with the clearing of the contracts traded there. The institution's most important early initiative was the EFX 50 index. Before this index existed, the French stock exchange published a market-trend indicator at the end of each trading day. That indicator was calculated from the closing values of 240 of the largest companies by market value. OMF introduced a different model: the EFX 50 followed a basket of 50 of the most liquid French listed shares and was updated continuously from transaction prices in the underlying securities. This made it more useful for real-time market observation and for the development of exchange-traded derivatives. OMF began publishing the index in November 1987 in association with CCF, a French bank. The index was made available through the Reuters network under the symbol EFX 50. Its creation supplied the Paris market with an investable and continuously observable equity-market reference at a time when electronic information distribution and index-based trading were expanding internationally. In July 1988, the French Ministry of Finance granted OMF authorization to operate as a regulated futures and options exchange. On 21 July, the institution launched two linked contracts: a futures contract on the EFX 50 and an option contract on that future. Both were cash settled, meaning that the contracts were resolved financially rather than through delivery of the underlying shares. Trading took place electronically through workstations installed in the dealing rooms of exchange members. The exchange's membership reflected the growing internationalization of French financial markets. Large European, Japanese, and American banks participated, alongside institutions that also traded the notional bond contract on MATIF. Société Générale and BNP acted as market makers in the EFX 50 futures, supporting liquidity and two-way prices. OMF also provided clearing for its contracts and functioned as a clearing house. A bank charter granted by the Bank of France allowed it to guarantee trades within its operating framework. OMF was acquired by a consortium of French banks in July 1988. Its independent existence was short-lived: at the end of the decade it was absorbed into MATIF SA. MATIF then launched a futures contract based on the CAC 40. The CAC 40 became the established benchmark for the French stock market and displaced the EFX 50. The institutional legacy of OMF consequently lies in its role as an early French venue for electronically traded equity-index derivatives and as an immediate predecessor to the CAC 40 derivatives market.

• 1989

  Absorption into MATIF

  [1]Options Market Franceen.wikipedia.org

  OMF was absorbed into MATIF SA at the end of the 1980s, after which MATIF launched the CAC 40 futures contract.

• 1988

  Regulatory authorization granted

  [1]Options Market Franceen.wikipedia.org

  The French Ministry of Finance authorized OMF to operate as a regulated futures and options exchange.

• 1988

  EFX 50 derivatives launched

  [1]Options Market Franceen.wikipedia.org

  On 21 July, OMF launched a cash-settled EFX 50 futures contract and an option on that future, traded electronically by exchange members.

• 1988

  Acquisition by a French banking consortium

  [1]Options Market Franceen.wikipedia.org

  OMF was acquired by a consortium of French banks during July 1988.

• 1987

  EFX 50 index introduced

  [1]Options Market Franceen.wikipedia.org

  OMF began publishing the EFX 50 in November in cooperation with CCF through the Reuters network. It was based on 50 liquid French shares and offered continuous updates from transaction prices.

A specialized French regulated derivatives exchange and clearing house focused on electronically traded equity-index futures and options.

• Equity-market index · 1987

  EFX 50

  The EFX 50 was OMF's real-time index of 50 of the most liquid stocks traded on the Paris Bourse. Unlike the exchange's earlier end-of-day indicator based on 240 large companies, it was updated continuously using transaction prices from the underlying shares. It was distributed through the Reuters network under the EFX 50 symbol and later served as the basis for OMF's derivatives contracts.

• Equity-index future · 1988

  EFX 50 futures contract

  Introduced on 21 July 1988, the EFX 50 future gave market participants a cash-settled instrument for taking or hedging exposure to movements in the newly created French equity index. The contract was traded electronically from workstations in member dealing rooms, with market-making support from Société Générale and BNP.

• Equity-index option · 1988

  Option on the EFX 50 future

  OMF launched an option contract on its EFX 50 future at the same time as the future itself. The contract was cash settled and formed part of OMF's regulated futures-and-options offering before the institution was absorbed into MATIF.

• Exchange clearing

  Clearing services

  OMF cleared the futures and options traded on its market and acted as their clearing house. Its Bank of France bank charter enabled the institution to provide trade guarantees and settlement support within the exchange structure.

• 1988

  Launch EFX 50 futures and optionsProduct launch

  Background

  After receiving authorization to operate as a regulated futures and options exchange, OMF sought to make its new equity index tradable through standardized derivatives.

  Action taken

  On 21 July 1988, OMF launched a cash-settled future on the EFX 50 and an option on that future, using electronic trading workstations.

  Aftermath

  The contracts attracted international bank participation, with Société Générale and BNP acting as market makers. The products were later superseded after OMF's integration into MATIF.

  Source

• 1988

  Integrate OMF into MATIFM&A

  Background

  OMF was acquired by a consortium of French banks and subsequently became part of the broader MATIF structure.

  Action taken

  OMF was merged into MATIF SA at the end of the 1980s.

  Aftermath

  MATIF launched the CAC 40 futures contract, which replaced the EFX 50 as the principal French equity-market index reference.

  Source

• 1987

  Create a continuously updated French equity indexProduct launch

  Background

  The Paris Bourse had an end-of-day market indicator but did not yet have a streaming index based on transactions in a liquid basket of shares.

  Action taken

  OMF created and began publishing the EFX 50 in November 1987 with CCF through the Reuters network.

  Aftermath

  The EFX 50 provided the underlying reference for OMF's futures and options and preceded the later CAC 40 derivatives market.

  Source

1. 1Options Market Franceen.wikipedia.org