Eurex Comes to US Markets

Discussion in 'Index Futures' started by jearnest, Oct 8, 2003.

  1. jearnest

    jearnest Velocity Futures

    Eurex US to launch on February 1, 2004
    Eurex US to offer U.S. and European Fixed Income and Index Derivatives/
    Ferscha: Eurex US to accelerate growth in the US financial industry/
    Eurex offers U.S market participants equity partnership in Eurex US/
    Global clearing partnership to deliver clearing choice and direct access

    Frankfurt/Main, 16 Sep 2003
    Eurex, the world's largest derivatives exchange, announced today that it will launch its new fully-electronic US based exchange, Eurex US, on February 1, 2004. Eurex US will be a U.S. regulated exchange and will offer a full range of products including derivatives on U.S. and European interest rates and indices. With this step Eurex US will offer customers worldwide 20-hour electronic trading and clearing in U.S. Dollar- and Euro-denominated futures and options on futures. It will give U.S. customers direct access to and choice of clearing of the most liquid European futures for the first time. Eurex US will be based in and fully operated out of Chicago. It will use The Clearing Corporation as its U.S. clearing partner.

    Eurex CEO Rudolf Ferscha said "Eurex US will create new trading and clearing opportunities for our customers worldwide and accelerate growth in the U.S. financial industry as a whole. Eurex US will establish a level playing field in the U.S. futures industry for the first time. All its customers will have open and equal access to the world's most reliable and scalable electronic trading system at the lowest cost."

    Eurex US will begin trading on February 1. It will offer 20 hour trading from 8 p.m. until 4 p.m. the following day. Its products will include futures and options on 2-, 5- and 10-year Treasury notes and on 30-year Treasury bonds as well as the world's most liquid derivatives, the 2-, 5- and 10-year contracts on Euro interest rates. It will also include the most liquid European index derivatives, the futures on the European indices DAX® and Dow Jones Euro STOXX 50SM. All European products will continue to be also traded on Eurex's European platform and will be fully fungible with Eurex US' products.

    There will be no membership fees and customers will not need to buy seats in order to participate in Eurex US. This will give customers the opportunity to trade on Eurex US without holding a stake in the exchange, further removing barriers to entry. At the same time Eurex US will offer trading at cost levels far below those currently paid in the U.S. market: the vast majority of trades will be priced at 20 cents per contract or less depending on participation in incentive schemes. No individual trade, regardless of volume, will cost more than 30 cents per contract. Eurex US will commit to maintain key prices for a period of five years. Eurex expects that customers can save more than 100 million USD in trading fees annually.

    Eurex US filed formally for an exchange license with the Commodity Futures Trading Commission (CFTC) this morning. "We have had a very constructive dialogue with the CFTC and we look forward to working with the commission both now and in the future," Ferscha stated.

    Eurex seeks to intensify its partnership with U.S. customers. As announced in early September, Eurex will enter into an equity partnership in The Clearing Corporation, with Eurex taking a 15 percent equity stake with a wide range of US market participants holding the remaining 85 percent. Eurex CEO Rudolf Ferscha stated on Tuesday that Eurex is extending an invitation to U.S. market participants to become equity partners in Eurex US and that a significant stake in the exchange's equity is reserved for this purpose. There will be substantial industry participation in the exchange's governance.

    The Eurex US trading system will be based on the same state-of-the-art infrastructure and network as the successful a/c/e platform, on which over 80 percent of all trading in U.S. fixed income futures currently takes place. Current a/c/e users will be able to leverage their existing infrastructure with minimal implementation effort and expense. The new Eurex US trading platform will feature additional functionalities, which will give customers easy access to new trading strategies and facilitate a seamless integration of the OTC markets, creating new opportunities and further growth.

    "Eurex US represents a tremendous opportunity for customers worldwide. The high level of interest in our offering shows that customers are eager to participate in Eurex's global liquidity network and get access to the most liquid derivatives products worldwide. Access to a wider product range will increase their opportunities and our customers can lower their costs significantly. This will stimulate growth and strengthen Chicago's role as a financial center," said Michael McErlean, a Director of Eurex US.

    Under the global clearing partnership agreement signed on September 3, The Clearing Corporation will clear all trades for Eurex US. Customers of The Clearing Corporation will also have direct access to Eurex's European products. At the same time, Eurex customers worldwide will be able to clear Eurex US products via both Eurex Clearing as well as The Clearing Corporation. This global clearing partnership will increase the efficiency and flexibility of U.S. market participants through full fungibility, enhanced cross-margining and reduced collateral through the use of collateral pools for a wider range of products. As a result customers will save up to 95 percent of their current margin requirements, substantially increasing the efficiency of capital employed.

    About Eurex ( Eurex is the world's leading futures and options market for derivative instruments and the highest volume derivatives clearing organization in the world. Total clearing volume on Eurex exceeded 801 million contracts in 2002. It provides access to a broad range of international benchmark products: Eurex operates the world's most liquid fixed income markets, with 450 million contracts traded in the 2-, 5- and 10-year Euro interest rates in 2002. At the same time, Eurex is the leading exchange in European index products with a market share of over 70 percent. Furthermore, in the equity options business Eurex traded contracts with an underlying value of 583 billion Euro in 2002, making it the largest equity options market worldwide.

    Walter Allwicher and Uwe Velten will be happy to take questions from editorial staff:
    phone +49-69-2 11-1 15 00
  2. msfe


  3. i haven't been able to find a concise list of minis they will trade. has anyone come accross one?

  4. hjh9032


    Any information on Eurex setting up an equity options exchange??
  6. AC3


    Is there any word on the Dax being electronically traded ??? Just wondering if they will be putting it on the Globex system....any info wud b appreciated
  7. The DAX is already electronically traded on Eurex and liquidity is terrific. No need for DAX on Globex.
  9. There is a very good article in the new Futures magazine (cover story) by Daniel Collins that addresses the EurexUS and Chicago battle.

    Some possible outcomes for US Interest Rate futures seem to be:
    --Most of the Liquidity moves to either EurexUS or stays at Ecbot
    --Liquidity gets split between ecbot and EurexUS
    --Ecbot retains its volume and EurexUS gets lots of new volume and the total liquidity pool increases.

    It seems spreads between CME and CBOT contracts will get new beneficial margins because of the new common clearing. But on the flip side spreads between Eurex and EurexUS listed contracts will get new beneficial margins as well because of their common clearing firm.

    Cbot seems to have lowered exchange fees for members to compete with EurexUS fees. However, cbot is yet to compete on exchange fees for nonmembers. But apparently the majority of actual volume is conducted by Cbot members according to the article.

    Anyway, that is a summary, but get the article for more.............

    ---My opinion is that the overall volume will increase but I think eCbot will have more of total. But the prices will be in line at both so just trade whereever your broker gives you the best rate and if the majority of volume is dominant at one exchange, then thats the one to trade.
  10. I was reading the press release about the TT deal with EUREX and interpret it as follows.. If trader were to open an account with a FCM like IB, Velocity or Goldenberg to trade Eurex contracts in Feb 2004 trader still needs to pay the XPro at $1400/mo and not get relief since the deal signed today is for EUrex members. Does this mean that in order for trader to get the Pro free for x months, he has to apply for individual memebership at EurexUS?
    #10     Dec 3, 2003