Just over a month after announcing itself as the first futures exchange for healthcare, the Intelligent Medicine Exchange (IMX) has secured its first futures product, which is based on the Morningstar US Healthcare Index.

The Commodity Futures Trading Commission, an independent U.S. government agency, designated the Intelligent Medicine Exchange (IMX) as a contract futures market in January, making it a platform where investors agree to buy or sell contracts for specific quantities of an asset at a predetermined price that they will pay at a future date.

Morningstar Indexes is a global index solutions provider that offers insights and research to individuals, institutions, wealth managers, and advisors across all major asset classes, styles, and strategies. It offers traditional benchmarks for assessing risk and return, and solutions to help investors incorporate environmental, social, and governance (ESG) objectives into their investment process.

The Morningstar US Healthcare Index measures the performance of approximately 170 U.S. public healthcare companies, which includes biotechnology, pharmaceuticals, research services, home healthcare, hospitals, long-term care facilities, and medical equipment and supply businesses. Its largest current holdings are UnitedHealth, Eli Lilly, and Johnson & Johnson among others.

“A fundamental part of our long-term growth strategy for Morningstar Indexes is to diversify our channels of distribution and expand the ecosystem of global investors who are able to access our indexes. The growing use of our indexes in index-based derivatives products in recent years is a big part of that strategy,” Tim Benedict, spokesperson for Morningstar Indexes, told HCB News.

The company says its market capitalization-weighted index is designed for optimal tradability and liquidity.

IMX, also known as IMX Health, is a subsidiary of IMX LLC, and a two-sided marketplace that provides derivatives such as contracts to market participants. Future contracts lock in prices for products, protecting investors from potential losses resulting from rises or drops in product value. The exchange will also facilitate trading for options, where participants can choose whether or not to execute a futures contract previously agreed upon.

IMX CEO Jim Plante told HCB News that futures have stabilized pricing for airlines, oil companies, wheat farmers, and food manufacturers by establishing transparency and new investing opportunities and reducing financial uncertainties that lead to overcharging.

“IMX will create this for healthcare — pharma companies and hospitals can hedge their revenue. Insurance/reinsurance companies and large employers can hedge their costs,” he said. “An example is the near-complete shutdown of elective procedures during the Covid-19 pandemic. Healthcare providers would have been much, much better off if they could have hedged the anticipated loss of revenue.”

IMX trading operations are scheduled to commence in the second quarter of 2024.

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