Read this trade4success, 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. Michael B.
wow ! this is fantastic news. thanks for the info. under these conditions, the term "marketmaker" has little or no meaning. everyone will be a "marketmaker". YES !!! that is unless you own a seat in chicago.... best, surfer
Only time will tell. Eurex has 10,000 screens worldwide, so I would guess that the market will probably be deeper that the CBOT would like to admit. Plus, everybody with a TT Autospreader will be making Eurex US markets. Under any scenario, even if Eurex US falls flat on its face, it will have made our lives better by forcing the CBOT to compete on price in terms of screen-trading exchange rates. I don't see how the CBOT keeps the financial floor open - especially since Eurex has four times the annual revenue as the CBOT, and the CBOT will have to cut alot of costs somewhere if they intend to compete on price. Parking and office space in the CBOT building is really cheap right now. Pabst brings up a good point that seat prices for the AM have gone from $85K to about $140K. But that's still far short of the $500K they used to command - a dead cat bouce unless the CBOT merges with the CME. Eurex makes tons of revenue, and they appear willing to be a loss leader for the US market.
The lawsuit seems to keep backing up, maybe some think eurex will lose or the Chi boys have an ace in the hole like lower commissions , who knows. It's not a done deal and it's gonna be interesting. http://www.forbes.com/home_europe/newswire/2003/12/12/rtr1179986.html http://www.reuters.com/financeNewsArticle.jhtml?storyID=3977693&type=bondsNews
Swoop, I posted this last month, and I stand by it. Pabst Elite Member Registered: Dec 2001 Posts: 1394 11-06-03 07:44 PM I agree that the threat Eurex poses to the U.S. Exchanges portends lower electronic clearing fees. Whether the competition is ultimately short lived though, remains to be seen. Because of licensing agreements between the NASDQ and Standard & Poors with the CME, and Dow Jones's contract with the CBOT, it's doubtful that any successful index contract will be launched here by Eurex. If you look at Europe, the LIFFE still has the FTSE while the MATIF held on to the CAC-40. Also the dynamics behind Eurex's domination of European debt futures is quite different than the situation here in the States. The old German Bund contract at the LIFFE was supported by German institutions who needed little prodding to move their business to Frankfort. American banks and dealers will doubtfully be as eager to leave the exchanges in Chicago. Even with Bund trading exiting London, the LIFFE still remained viable with various debt products from the U.K., Italy, Spain, and Switzerland. However, voila', the E.U. was born, making virtually every product outside of the U.K.'s Long Guild and Short Sterling obsolete. Thus the German Bund became the Euro Bund and along with the rest of the curve, BOBL ect., Eurex was king by default. There was a time when the MATIF's 10yr. Notional was one of the most volumous futures contracts in the world. Now it doesn't even exist. Afterall, no French Franc, no French domestic debt, hence no Notional. So the magic of Eurex was both situational and lucky. Over the years I've seen many new contracts fail (i.e. look at the CME's Naz Comp.), and many exchanges try to steal away another's franchise. Rarely does it work out. At best we can hope that the competition continues, and that fee's are pressured lower. But the utopian idea of trading for pennies a contract is a long way off.
I don't think they're referring to the end user, retail trader when they talk about no membership fees and "customers" will not need to buy seats. Individuals won't be allowed to trade directly on Eurex - you'll still have to go through a broker. You've still got to be cleared. So the talk about costs, etc. refers to Eurex's customers, i.e., brokers/clearing firms/etc.