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To: TFF who started this subject	10/24/2003 1:57:59 PM
From: TFF	of 12617

Eurex clears US exchange hurdle By Jeremy Grant in Chicago Published: October 23 2003 23:23 \| Last Updated: October 23 2003 23:23 Eurex on Thursday night cleared the biggest hurdle yet in its attempt to set up a US futures exchange when shareholders in the clearing house it plans to use voted in favour of a recapitalisation. The plan by the world's largest derivatives exchange, owned by Deutsche Börse and SWX Swiss Exchange, is being bitterly opposed by the Chicago Board of Trade, which faces a challenge to its decades-long dominance of the US Treasury bond futures market because Eurex plans to offer the same range of products. It and the Chicago Mercantile Exchange are being sued by Eurex, which claims they had illegally sought to prevent the entry into the US of a foreign competitor by offering "financial inducements" to encourage a "no" vote. Rudi Ferscha, Eurex chief executive, said the outcome of the vote on Thursday meant Eurex had "reached an extremely crucial milestone". "The market has voted with its feet. There was very broad support from a range of different customer groups and this is particularly important for us because if there's broad support it indicates wide interest in our exchange model," he told the FT. The vote involved 87 shareholders in The Clearing Corporation, which will sever ties with the CBOT to act as clearer for Eurex instead. A clearing house stands between two parties to a trade and guarantees against default. The vote was won by 50 votes to 34, with the rest abstaining. The vote had seemed finely balanced between smaller shareholders - many of them floor traders on the CBOT - and large brokerages that mostly support the entry of Eurex into the US. Eurex officials had spent the past four days in Chicago - where the new US exchange will be based - lobbying shareholders. Huw van Steenis, an analyst at Morgan Stanley in London, said: "I think this [vote] is improves the odds of Eurex's success. It means there is a groundswell of support from the brokerage community despite the best efforts of the Chicago exchanges to put obstacles in their way." The recapitalisation allows The Clearing Corporation to separate a "guarantee fund" - used to protect against any trade defaults - from the shares currently held in the corporation by shareholders. It also allowed Eurex on Thursday night to invest $15m in The Clearing Corporation and assume one seat on the corporation's board. Eurex was hit by a technical problem on Thursday that delayed the start of trade by several hours. Frankfurt-based Eurex, said: "The reason was a software problem that developed following the interaction with a third-party software. By 12.35pm all affected customers were able to reconnect. Trading was fair and orderly from the start of trading." Additional reporting by Alex Skorecki

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