Trading in Russell Index Futures on Eurex US Supported by Strong Network of Market Makers Russell 1000® and Russell 2000® futures to begin trading on February 4 Three month fee waiver for Russell products Jan 11 2005 Eurex US, the fully-electronic U.S. futures and options exchange, today confirmed February 4 as the launch date for its new futures on the U.S. large-cap Russell 1000 index and the U.S. small-cap Russell 2000 index. The introduction of these products will expand Eurex USâs product portfolio to include U.S. index derivatives for the first time. "The new equity index derivatives suite reinforces Eurex USâs commitment to offering customers access to a full range of U.S and European products, pending approval by the CFTC," said Satish Nandapurkar, CEO of Eurex US. "This new asset class will be supported by a strong network of market makers, ensuring liquidity and creating low cost trading opportunities for our customers." To provide basis liquidity in this new market, 15 firms have already agreed to act as market makers for the new futures on the Russell 1000 index and the U.S. small cap Russell 2000. These firms will provide additional liquidity and increase order book depth by continuously quoting prices and offering competitive spreads. Market makers will be active during the core U.S. trading hours (8:30 am to 3:00pm CST). Eurex US will waive all trading fees for all market participants for the first three months of trading in the Russell products. After this initial fee waiver, proprietary and market maker transaction fees will be U.S. 2.5 cents for trades executed in the order book and U.S. 30 cents per side for Over-The-Counter (OTC) trades. Customer transaction fees will be U.S. 50 cents per side for trades executed in the order book and OTC trades will be subject to a surcharge of 30 cents per side. "Eurex US has gained good support from market makers and offered a three month fee waiver in the trading of these products to ensure a solid start of trading," said Kelly Haughton, strategic director of Russell indexes. "With Phase I of the Global Clearing Link in place and the introduction of Russell 1000 and Russell 2000 futures on Eurex US, American traders will be able to more efficiently spread the U.S. and European markets." The large-cap Russell 1000 index measures the performance of the 1,000 largest U.S. companies based on total market capitalization. The Russell 2000 measures the performance of the 2000 companies following the Russell 1000 components and is the industry standard for U.S. mid-cap companies.
Why on earth would they be fungible..?????? EurexUS is trying to steal business from CME/cbot and as you can imagine they are pissed.... The problem with the Market Making deal is you don't get payed unless you do a certain Vol in each product and also you have to quote the Russell 1000
That is true. But if I can meet the 3 tick spread with 15 contracts and trade the minimum required volume, I would trade for free and get a stipend at the end of the month. That's not a bad deal if you have the credit to do it. Also, you don't have to worry about qualifying. If you qualify, you get paid. If not, then you don't. There is no drawback or penalty.
Im I right in assuming CME has not lowered fees in response to this threat? I cant find any news indicating such on their website.
The CME's reaction will be key to the survival of this product. Because of its public structure and the fact that it has to answer to shareholders, the CME may be slow to move towards challenging EurexUS. The ER1 and ER2 on EurexUS are fungible and the ER1 can act as a proxy for the ES. EurexUS is also offering some seriously good incentives for funds especially during calendar spreads. There are several other key differences that give EurexUS an edge. Just to be clear, I don't particularly favor one over the other. Although I'm a member, I just think that our exchanges need a little nudge to be creative and competitive and more open to equal access.
I have been shocked that CME has not responded. What are they waiting for?? If they think this one is going to go the same as fixed income with the Cbot without even a competitive answer from the merc. The CME is going to be in for a RUDE awakening. Out east they are lining up to take business away from the CME on this one. It will just be a question of liquidity and WHEN. CME will have a window of opportunity. But if they do not get aggressive they may get themselves in trouble. Futurestrader71, I will not be trading the EurexUS from day one---so keep me informed on the liquidity. I am going to go to the site and check out the depth. But I value your opinion. So give us reports on what you see and hear.