Eurex moves closer to U.S. futures operation
Reuters, 11.21.03, 5:18 PM ET
By Ros Krasny
CHICAGO (Reuters) - The National Futures Association's board has OK'd a deal to provide U.S. market surveillance services for Eurex, putting the German-Swiss exchange closer to opening its U.S. branch.
"The board affirmed the executive committee's decision to enter an agreement to provide Eurex with regulatory services," said NFA spokeswoman Cindy Cain.
Eurex will pay a monthly guarantee to NFA and a per-trade fee on top of that, said Daniel Roth, NFA president. The monthly fee will be $55,000 for the first year, $62,000 for the second and $69,000 for the third, he said.
The 25-member board voted 16 to 2 in favor of the contract with Eurex, the world's largest futures exchange, Eurex said in a statement that welcomed the deal's approval.
Eurex chief executive officer Rudolf Ferscha said recently that striking the deal with NFA was a key part of "getting all the ducks in a row" for Eurex's planned February start.
Among those recusing themselves were Bernard Dan, president of No. 2 futures exchange the Chicago Board of Trade. The CBOT has mounted a aggressive campaign against Eurex.
Eurex's proposed U.S. mart will trade U.S. Treasury derivatives identical to those that account for about 70 percent of CBOT volume. The exchange will also trade European stock index futures.
The initial term of Eurex's NFA agreement is three years, with automatic one-year renewals.
Cain told Reuters the NFA will provide trade practice and market surveillance for Eurex US, monitoring its markets and analyzing data for suspicious trading. Eurex maintains the ultimate authority for market supervision, she said.
The Chicago-based group will also help with registration and background checks for firms and individuals who want to be members of Eurex, and offer dispute resolution and arbitration services, Cain said.
The NFA provides regulatory programs and services to a number of exchanges but has done oversight as extensive as that planned for its deal with Eurex for only two -- BrokerTec Futures Exchange, which will stop trading in December, and the Merchants Exchange.
The biggest piece of the Eurex puzzle remains approval from the Commodity Futures Trading Commission, the U.S. futures industry regulator, which has been reviewing Eurex's application since mid-September.
Despite lobbying against Eurex from the CBOT and the Chicago Mercantile Exchange and scrutiny from U.S. lawmakers, market participants are getting ready.
"I think Eurex's proposal will be approved in the third week of January. If there are holes in the application that anyone at the CFTC sees, those holes will be filled way before that," said Scott Early, a partner with the Chicago law firm of Foley & Lardner and a former general counsel for the CBOT.
CFTC staff recently posed about 20 questions to Eurex about its application, which the exchange answered in a 29-page document. Eurex also filed a 22-page response to issues raised during the public comment period on its application.
Copyright 2003, Reuters News Service |
