Intercontinental Exchange plans to launch its first total return future next month, making the US exchange group the latest to offer what has become in recent years a hugely popular contract.

ICE said on Tuesday it will launch on November 14 a total return future (TRF) based on UK benchmark the FTSE 100 subject to regulatory approval.

The TRF launch will pitch the London-based arm of the US group into direct competition with Eurex, the German exchange that launched a FTSE 100 TRF in March 2021.

Caterina Caramaschi, ICE’s vice president of financial derivatives who was promoted to that role at the start of this month, said: “ICE's relationship with FTSE Russell has spanned more than three and a half decades and we are delighted to now expand our FTSE markets with the introduction of the TRF.”

ICE is the European home of derivatives referencing FTSE indices, offering a FTSE 100, a FTSE 100 dividend and a FTSE 250 future as well as a FTSE 100 and FTSE 250 option.

The ICE FTSE 100 future is the European standard. London-based ICE Futures Europe traded 36.4 million lots of FTSE contracts in the year to the end of October 17, the vast majority of which were FTSE 100 contracts.

Trading volume in the ICE FTSE segment is up 8% on last year, reflecting pressure on the UK economy.

Eurex’s FTSE book is tiny compared to ICE’s but the German exchange has built some momentum with the FTSE TRF, which traded 46,500 lots in August, the latest data available.

Given the potential margin offsets between the FTSE 100 future and the FTSE 100 TRF, ICE will try to use its dominance in the index future to drive adoption of its TRF.

Caramaschi said: “The UK market is firmly in focus with our customers who want to gain or manage exposure to the UK economy and, with the TRF, customers can benefit from the existing liquidity across ICE’s FTSE-linked product portfolio as well as the margin offsets available.”

Caramaschi, who previously ran equities at ICE, was promoted at the start of this month to also run interest rates following the departure late last month of former ICE financial derivatives head Steve Hamilton.

The new head of equities and rates at ICE discussed at the start of the month her plan to expand ICE’s FTSE franchise.

The chief executive of Eurex Michael Peters told Global Investor this month the German market has after one year “25% of the overall open interest of the combined FTSE TRF and futures open interest of ICE and Eurex”.

Eurex’s EuroStoxx 50 total return future, which launched in 2016, is the most popular in Europe. It traded nearly 7 million lots in the year to the end of August, up 96% on last year, according to the exchange.

Euronext’s CAC 40 TRF, launched in 2018, has also done well, trading 150,000 lots in the eight months to the end of August, according to the European exchange.

Euronext said last week it is targeting banks and hedge funds with its new extended maturities for the TRF based on the main French blue chip index.