After years of anticipation, the Chicago Mercantile Exchange (CME) has announced plans to launch a futures contract based on the MSCI EAFE international index. The contract is designed to help investors engage in a variety of trading and portfolio management strategies in developed international equity markets. The contracts are scheduled to launch on March 21, 2006.

Created in 1969, the MSCI EAFE Index is the preeminent benchmark for measuring international stock market performance. It comprises 21 MSCI country indexes, representing the developed markets outside of North America. Approximately $1.5 trillion is benchmarked to EAFE globally, including $20-plus billion tied to the iShares MSCI EAFE ETF, the second largest exchange-traded fund (ETF) in the world.

There has long been a call for EAFE futures, but it is thought that MSCI had reservations about potential problems with the products, including the possibility of insufficient liquidity. The wild success of the iShares fund, however, showed the market's demand for a low-cost way to trade the popular index, which is difficult to replicate accurately and at low cost because of the wide variance of markets, international tax issues and trading logistics involved. It is felt that the future s , should they be successful, not only could bring increased liquidity to EAFE index trading, but also more accurate market pricing when markets in the EAFE exchange are closed for trading.