Eurex in deal with BOTCC on futures clearing
Wed May 21, 2003 07:12 PM ET
By Ros Krasny
CHICAGO, May 21 (Reuters) - The German-Swiss exchange Eurex has inked a deal to make the Board of Trade Clearing Corp. its U.S. clearing entity as it finalizes plans to open a U.S. derivatives exchange in early 2004, industry sources told Reuters.
Eurex would not buy BOTCC outright, but would sign a contract to guarantee BOTCC a minimum level of monthly revenues from its new U.S. exchange, the sources said.
"A deal has been signed between BOTCC and Eurex, and is a lucrative one for BOTCC," said a senior official at a BOTCC member firm.
"It contains minimum guarantees on how many millions (of dollars) Eurex will pay to BOTCC each month. That was essential for BOTCC, which is looking for operating comfort," the official said.
Eurex, the world's largest futures exchange, is thought likely to go head-to-head with the Chicago Board of Trade when it opens its U.S. operations.
The CBOT has used BOTCC as its clearing entity for decades, but announced in April it would start a clearing link in 2004 with its long-time rival, the Chicago Mercantile ExchangeCME.N .
In January, the CBOT said it would drop the electronic trading platform it operates with Eurex at the end of 2003. Eurex then announced plans for its own U.S. exchange.
An industry source close to BOTCC told Reuters that under the new arrangement, BOTCC has denied Eurex fungibility for CBOT products.
That means that open positions in the CBOT's suite of U.S. Treasury futures and options products could not simply be shifted over to a new Eurex-owned exchange.
A spokesman for BOTCC said there was "no comment, nothing to confirm" about the talk.
Richard Heckinger, head of the U.S. representative office of Deutsche Boerse DB1Gn.DE , one of Eurex's parent exchanges, referred comment back to Eurex's Frankfurt headquarters.
Nailing down BOTCC as its futures clearing and settlement entity would put Eurex half-way toward its stated goal of opening a U.S. exchange in 2004.
Eurex would still need to be an "approved marketplace" for U.S. futures and options trading. It could achieve that either by buying an existing exchange or petitioning U.S. regulators for permission to start a new exchange.
A Eurex spokesman told Reuters recently that talks with U.S. futures regulatory authorities were well advanced.
Recently, talk has centered on Eurex possibly making a bid for BrokerTec Futures Exchange, an all-electronic exchange backed by major Wall Street firms.
BFE already lists futures in contracts such as U.S. 10-yearTreasury notes, but has made few inroads on CBOT's franchise since opening in November 2001. (Additional reporting by Kyle Peterson) |
