Eurex to launch US exchange in February

Eurex plans to launch its long-anticipated US futures and options exchange in Chicago on February 1. At a press conference this morning in Chicago, Eurex chief executive officer Rudolf Ferscha said Eurex filed this morning with the US Commodity Futures Clearing Corporation for permission to run a regulated exchange that will trade a “full range” of US and European interest rate and equity products.

The exchange finalised its clearing partnership with the Clearing Corporation (formerly the Board of Trade Clearing Corporation) earlier this month, and the arrangement will give US customers access to Eurex’s European products and vice versa, Ferscha said.

Ferscha said Eurex US is seeking equity participation from users of the exchange, up to and including board-level representation. These partners will have “real governance participation”, he said.

Eurex US poses a serious challenge to the existing Chicago exchanges because of its low pricing. Michael McErlean, a director of Eurex US, said it would charge 20 cents per contract or less “on the vast majority” of contracts, and that “no trader will pay more than 30 cents per contract”. The exchange has committed to those prices for five years, he said. The other Chicago futures exchanges have fees that often run to over $1 per contract, and have different prices for members and non-members.

McErlean said the exchange will initially offer a full range of US Treasury contracts, including the two, five and 10-year notes and the 30-year Treasury bond, futures and options on Euro interest rates, and equity index products including the Dax and the DJ Eurostoxx 50.

McErlean claimed that, on US Treasury products, Eurex’s pricing could save the market $100 million annually. “That’s why there’s such a buzz about Eurex coming to the US,” he said.

Eurex will offer access to the market through its existing trading systems, so users will not need to install new screens or lines, although the system will be upgraded with new software. It will have a block trading facility for both futures and options with a minimum trade size of 2,500 contracts.

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