Are You Overpaying to Hedge Your Interest Rate Risk?
It’s a common misconception that trading U.S. treasury futures contracts is the lowest cost way to gain or reduce exposure to interest rate risk. But in fact, it’s often more cost-effective to trade U.S. treasury securities electronically in the cash markets using the request-for-quote trading protocol, or RFQ. That’s because exchange-based futures trades have a wider minimum bid/ask spread than the average spread received on an RFQ platform, plus added expenses. Watch this tip to find our more.