09 Feb 2004 20:18 Eurex US fast out of the blocks in CBOT contest By Ros Krasny CHICAGO, Feb 9 (Reuters) - Eurex US, the American arm of the big German-Swiss futures exchange, had a busy first day as it began its quest to wrest the lucrative U.S. Treasury derivatives business from its long-time home at the Chicago Board of Trade. Trading opened on Sunday night local time, the official start to Monday's global trading day. By midafternoon on Monday, Eurex US had traded more than 37,000 contracts in Treasury futures on its all-electronic platform. "We already have the tightest possible markets in all of our products," Rudolf Ferscha, Eurex's chief executive officer, told reporters. "This is the most liquid exchange launch ever." Bids and offers were similar to those at CBOT, which has had a near-monopoly position in U.S. Treasury derivatives for decades. In 10-year Treasury note futures Eurex's volume was about 8.8 percent of the CBOT's. "That's quite a good start. But we should wait at least eight weeks to judge whether it is successful or not," said Peter Barkow, analyst at HSBC in Dusseldorf. Officials of Eurex, the world's biggest futures exchange, have repeatedly dodged questions on their goals for the new exchange in market share, volume and open interest. But Michael McErlean, sales director of Eurex US, said the business plan contained expectations that options will trail in terms of growth compared with futures. "You need a vibrant underlying (futures) market to want to offset positions in options. It is not capital-efficient to trade futures and options on different exchanges," McErlean told Reuters. At the CBOT, most Treasury futures contracts are already traded electronically, but options on futures are still the preserve of the CBOT's open-outcry trading floor. Eurex US has signed up 40 permanent market makers, who will supply bid and ask quotes on Treasury futures products continuously during core market hours. Regular market makers will supply quotes for options "upon request," Eurex said. Early trading suggested many different firms were stepping up to the Eurex US plate, officials said. "Virtually every major participant has submitted trades to us for clearing," said Dennis Dutterer, president of Chicago-based Clearing Corp., which will clear, or guarantee, derivatives trades on the new mart. The exchange is expected to attract interest from large investment banks and futures trading companies, which strongly supported Eurex's application. Many of those companies now have ownership stakes in Eurex US but also own CBOT memberships. Satish Nandapurkar, CEO of Eurex US, said the exchange wanted to attract customers from across the spectrum, including trading arcades, professional market-making firms, big banks and institutions. Eurex US starts at a time when U.S. Treasury trading is buoyant. In January, CBOT financial derivatives volume was up 45 percent from a year ago. Open interest, a measure of a contract's depth, hit record highs in CBOT 10-year and five-year Treasury note futures last week. The high U.S. federal debt is expected to create more demand to trade futures and options to protect against or speculate on changes in interest rates. The CBOT last week announced temporary fee cuts for electronic trading which it hopes will stop some traders from giving Eurex a test-run. It also said it would list futures on Bund, Bobl and Schatz, Eurex's big German debt derivatives. (Additional reporting from Rolf Benders in Frankfurt)
who are supposed to provide liquidity? heck ... its evening session .... and they are not even there right now ... prob having a beer somewhere