This month, Nasdaq announced the first trade in its Custom Basket Futures (CBF), an innovative new contract designed to provide asset managers with flexibility, capital efficiency and counterparty risk mitigation.
The first deal was conducted by University of Cambridge Investment Management (UCIM) with a notional value of $80 million and UCIM became the first organization to trade Nasdaq Custom Basket Futures.
The Custom Basket offering was first launched by Nasdaq with Custom Basket Forwards in 2023. In March 2025 the offering was expanded to include futures.
The products offer a more streamlined and transparent way to manage bespoke equity exposures. They enable clients to use standardised contracts traded on a regulated market and cleared at a central clearinghouse (CCP) instead of relying on over-the-counter equity swaps.
While Nasdaq was developing the product in 2023, Acuiti partnered with the exchange on a research report looking into the challenges that European asset managers face as they seek to diversify and increase the sophistication of their trading strategies, particularly around ESG and thematic investing.
The report found that, in the wake of regulatory overhauls and the rise of ESG and thematic investing, asset managers are facing a tough choice as they seek to achieve capital efficiency, low cost and customisability. The report looked into these issues and identified an “Investment Trilemma” faced by asset managers.
Following the 2008 Global Financial Crisis, regulators introduced sweeping reforms — from Dodd-Frank to EMIR and the now fully implemented Uncleared Margin Rules (UMR) — that have significantly reshaped the OTC derivatives market.
While these reforms succeeded in reducing systemic risk, they have also increased the complexity and cost of doing business in OTC markets, especially for smaller firms.
Against this backdrop, the demand for customisable investment products has grown with the rise of ESG investing and thematic investing — targeting trends such as AI, clean energy or future mobility.
To realise these strategic goals, asset managers are looking for products that are capital and margin efficient, offer low trading costs and are customisable to their specific requirements.
The most common instruments available to asset managers, principally ETFs, listed futures and options and OTC baskets, can typically meet only two of these needs. For example, ETFs offer capital efficiency and low cost but lack customisability. OTC swaps provide customisation but come with high operational and capital requirements.
CBFs allow asset managers to create a futures contract on a tailored basket of equities, traded on a regulated market and cleared at a CCP.
This innovation is significant. It means firms can access capital efficiency via CCP clearing and achieve low costs by avoiding the complexities of ISDA agreements all while trading a highly customisable product.
The Acuiti report found that over 70% of European asset managers saw thematic investing as a significant opportunity and more than half expected the volume of their OTC trading to decline over the next three years.
One of the key insights from the whitepaper was that high levels of customisation have largely been the preserve of larger firms with the infrastructure to manage complex swap books. CBFs open the door for small and mid-sized firms to play at the same level — without needing to invest in costly operational capabilities.
Sell-side firms also stand to benefit, using CBFs to reach new clients and deliver differentiated product offerings without increasing bilateral exposure or compliance complexity.
As the appetite for bespoke ESG and thematic products grows, the market is likely to see an acceleration in the “futurisation” of formerly OTC-only strategies.
The report concluded that CBFs may well become a standard tool in the portfolio construction toolbox, particularly as they address the key pain points that have hindered widespread adoption of custom strategies.
To download the report, visit: https://www.acuiti.io/solving-the-investment-trilemma/