Eurex is planning to launch a US derivatives exchange of its own. The company announced today that it was in advanced talks with US regulators and market participants to launch a US-registered and regulated exchange offering a full range of derivatives on dollar interest rates, indices and equities. “Eurex will offer a full range of US fixed income, equity and index products to customers worldwide in early 2004,” says Eurex CEO Rudolf Ferscha.
This move into the US market dates back to the restructuring of the a/c/e alliance with the Chicago Board of Trade (CBOT) in July 2002, when Eurex and CBOT agreed to shorten the remaining term of the alliance from October to January 2004 and to eliminate by the same date all product and co-operation restrictions previously in place until 2008. This has liberated Eurex to compete in the US market in all products and to establish new partnerships.
Eurex developed and operated the a/c/e trading platform, on which more than 70 per cent of all US bond futures are traded already, and this (plus the Eurex international network) will be the infrastructure for the new exchange as well. Currently, a/c/e has over 150 members linked to the system and, out of 430 Eurex members, 72 are based in the United States. Last year, 130 million contracts were traded on a/c/e, making it the second largest electronic platform in the United States. 801 million contracts changed hands on Eurex, the worlds largest electronic market.
Eurex says that the new exchange will give customers the benefit of a new market model: a level playing field for all participants as well as open access, seamless integration of OTC markets and lower prices. “These features have helped Eurex to develop the European market in bond futures from a level of 35 per cent of the U.S. market in 1997 to 170 percent in 2002, creating unprecedented levels of access and liquidity,” explains Eurex. “Since all products and services will be available through existing infrastructures, customers will be able to use them without migration costs.
As Ferscha puts it: “Our customers worldwide will be able to leverage their existing Eurex and a/c/e infrastructures to benefit from low cost open access to the full range of U.S. and European products.”