Discussion in 'Index Futures' started by Maverick74, Feb 25, 2003.

  1. Maverick74


    Here are the first publicly available information about Eurex's U.S. exchange plans that I have seen:

    New exchange launch planned for U.S.

    Equity Options Exchange

    The Equity Options Exchange will be a fully automated securities market under the regulatory jurisdiction of the Securities and Exchange Commission. It will list option contracts on the most active U.S. stocks and ETFs. The Exchange will offer all options market participants an unparalleled opportunity for trading U.S. equity options.

    Product Offering
    The Exchange will initially list options on the most active US stocks and ETFs, which will be fungible with other multiple listed options at the Options Clearing Corporation. Options on indices are currently under consideration by the Exchange.

    An Innovative Market Model - New Opportunities for Options Traders
    The Equity Options Exchange model is based on the principles of transparency, fairness and accessibility. The Exchange provides easy and cost efficient access to options on the most active U.S. stocks and ETFs.

    Most Active U.S. Options - Fully Automated

    -Open Order Book
    -Order book depth of up to 10 bid/offers
    -Firm Quotes

    -Competing Market Makers
    -No execution privileges
    -Price/time priority
    -Complete anonymity

    -Easy membership process
    -No annual fees or dues
    -Direct Access for sponsored traders
    -Order routing customers welcomed

    Advantages for Market Makers
    The Exchange will offer fee privileges to Market Makers while at the same time encouraging voluntary and competitive market making.

    Market Makers can be:
    Continuous Quote Market Makers (CQMM) who provide continuous quotes for designated series, or
    Price Improving Market Makers (PIMM) who are given incentives to improve prices in the market.
    A Market Maker could be either a CQMM or PIMM simultaneously for different options.

    Market Makers will be able to use automated quote machines and can provide their quotes over high bandwidth connections to the Exchange.

    Attractive for Order Flow Providers
    The Equity Options Exchange model will allow order flow providers to get the best prices for their customer orders by ensuring:
    -What you see is what you get.

    -Step-up opportunities to the whole market that maximize the chances that customer orders are filled promptly without being sent out.

    -The Exchange will be part of the intermarket options linkage.

    Order flow providers will also be able to connect customers (that have entered into a sponsorship agreement with them) through automated order routing systems. This ensures a complete electronic process from order entry to confirmation.

    The Exchange's trading system will be based on the proven technology of Eurex, the world's largest derivatives exchange. Members will enjoy the following benefits:

    -High Bandwidth connections
    -Internet connection alternatives
    -Automatic failover mechanisms
    -Highly reliable and advanced security systems
    -Open programmable interface

    Entities registered as broker-dealers may become members of the Exchange and have direct access to the trading system.

    A trader who has been designated by a member as one of the following will have direct access to the system:

    Authorized Trader

    Market Maker Authorized Trader

    A customer can take part in the market by either becoming a sponsored participant or by trading through an authorized trader of an existing member.
  2. just21


    I seems better than the BOX as no price improvement so that you can be on the bid or offer and not be stepped infront of by the market maker.
  3. Let's just get it started ...
  4. just21


    Eurex has not yet decided whether it will set up its own US futures and options exchange or buy an existing exchange, the German-Swiss exchange said on Wednesday.

    The exchange was responding to reports, based on information posted on its website on Tuesday but later withdrawn, that it was likely to set up its own US derivatives exchange.

    Speculation that Eurex may have decided to set up its own exchange has been partially fuelled by the disclosure in the Financial Times last week that the planned sale of the American Stock Exchange had hit difficulties because some of the leading potential buyers have lost interest.

    Eurex was among two other parties - the Hong Kong Stock Exchange and the venture capital firm Blackstone Capital Partners - that are understood to have withdrawn their interest in recent weeks, citing corporate governance and ownership issues as well as concerns about its declining worth.

    Eurex announced in January that it planned to offer a range of futures and options contracts as part of a new US derivatives exchange it would establish in early 2004.

    The move was prompted when the Chicago Board of Trade rejected an offer from Eurex of continuing to use an electronic trading platform provided by Eurex since the late 1990s.

    The CBOT instead chose Liffe-Connect, developed by London-based Euronext-Liffe, Eurex's arch-rival in Europe.

    The CBOT's decision to switch from Eurex to Euronext-Liffe immediately transformed the CBOT's relationship with Eurex from co-operation to one of potentially intense competition as Eurex intends to use its new US exchange to compete head-on with the CBOT's core US treasury bond futures contracts, as well as possible other products.

    Eurex laid out in a "consultation document" posted on its website on Wednesday what it called "discussions" about the possible format of a US options exchange operation. It is intended for its 430 members, of which 72 are based in the US.

    Eurex's US members are currently allowed to trade euro-denominated products on Eurex, which operates under German-Swiss legal jurisdiction. However they cannot trade US dollar denominated products until Eurex has established, or acquired, a US derivatives exchange under US rules.

    Walter Allwicher, Eurex spokesman, said the consultation document "should facilitate dialogue on the expansion of all our business into US based products".

    "It discusses a market model but not how we set up the exchange because we still have the option of doing it ourselves or in possible partnership and we will evaluate which one fits best," he told the Financial Times.

    Although the consultation document does not address the issue of futures products, this did not mean that Eurex was not considering them. "We haven't committed so far to which will be the first product. We've only said that we want to have the full range of products ready in 2004," Mr Allwicher said.

    The consultation document (available on said "The Equity Options Exchange" would be a fully automated securities market under the jurisdiction of the US Securities and Exchange Commission. It would list options on the most active US stocks and exchange traded funds (ETFs).

    It would use a system of competing market makers, rather than a model reliant of designated market makers, which is also sometimes used in the industry. Options on the planned equity options exchange would be "fungible" with other "multiple listed options" at the Options Clearing Corporation - that is, positions taken on securities at the new options exchange could be offset by others at the OCC.

    The exchange's trading system would also be based on existing technology used by Eurex.
  5. bone

    bone ET Sponsor

    It is a fundamental hallmark of Eurex that timestamps precede MarketMakers unless they better the price. Other than fees, there is no advantage to being a MM in Eurex.
  6. sabena


    Eurex, that's the way to go !!

    When will the CME bring down

    those criminal high exchange fees ?!
  7. Eurex sounds like Chicago's worst nightmare.
  8. sabena


    one's nightmare's is another one's