Eurex, Chicago Exchanges get ready to rumble
(Reuters) — Swiss-German derivatives exchange Eurex said on Tuesday its long-awaited U.S. exchange, Eurex US, will start trading on Feb.1, in direct competition with the mighty Chicago Board of Trade (CBOT).
"Eurex US will establish a level playing field in the U.S. futures industry for the first time," Eurex Chief Executive Rudolf Ferscha said in a statement.
The new fully electronic exchange, based in Chicago, will offer futures and options on two-year, five-year and 10-year U.S. Treasury notes and on 30-year Treasury bonds — identical to those traded on the CBOT, the No. 2 U.S. futures exchange.
Eurex, the world's biggest derivatives exchange jointly owned by Deutsche Boerse and the Swiss Stock Exchange, said it had formally applied for an exchange licence with the Commodities Futures Trading Commission (CFTC) on Tuesday morning.
Many observers had expected Eurex to take an existing U.S. exchange as a partner in its new U.S. venture, which came about after the CBOT said in January it would end its alliance with Eurex, known as a/c/e, at the end of 2003.
Eurex said it would invite U.S. market participants to take equity stakes in Eurex US and that a significant stake in Eurex US's equity was reserved for this purpose.
Clearing of trades will be done by its U.S. partner, The Clearing Corporation, with whom Eurex entered into an equity partnership in September.
The new U.S. exchange will charge no membership fees, and customers will not need to purchase a seat on the exchange, Eurex said.
"This will give customers the opportunity to trade on Eurex US without holding a stake in the exchange, further removing barriers to entry," Eurex said.
"At the same time Eurex US will offer trading at cost levels far below those currently paid in the U.S. market. The vast majority of trades will be priced at 20 cents per contract or less depending on participation in incentive schemes."
It added that the execution of an individual trade, irrespective of volume, would cost no more than $0.30 per contract.
In addition to the products based on U.S. financial instruments, Eurex US will offer futures on the benchmark German DAX index and the Dow Jones Euro Stoxx 50 index.
Eurex is expected to give further details of the new exchange at a press conference in Chicago on Tuesday.
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