Eurex Exchange

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Eurex Exchange
European Exchange AG
Eurex-Logo.svg
Type Derivatives exchange
Location Eschborn, Germany
Founded 1998
Owner Deutsche Börse AG
Key people CEO: Andreas Preuss, Members of the Board: Jürg Spillmann, Dr. Thomas Book, Brendan Bradley, Mehtap Dinc, Gary Katz, Michael Peters, Peter Reitz
Website www.eurexchange.com

Eurex Exchange is a German derivatives exchange that offers more than 1,900 products covering all major as well as alternative asset classes. The online marketplace is the gateway to some heavily traded EUR-denominated equity index and fixed income derivatives.

The portfolio also includes contracts on single equities, ETFs and dividends. Furthermore, volatility, property and a growing choice in commodity derivatives complement the offering. Members can enter off-order book trades through the Eurex Trade Entry Services giving opportunity to trade big volume without execution risk. All this on one single platform with easy access for more than 400 participants and more than 7,000 traders in more than 30 countries.

The exchange was established in 1998 with the merger of Deutsche Terminbörse (DTB, the German derivatives exchange) and SOFFEX (Swiss Options and Financial Futures). It is owned by Deutsche Börse and is part of Eurex Group, together with the International Securities Exchange (ISE), the European Energy Exchange (EEX), Eurex Clearing, Eurex Bonds and Eurex Repo.

History[edit]

1998 foundation[edit]

Eurex was formed on September 4, 1997, when Deutsche Terminbörse (DTB) and Swiss Options and Financial Futures Exchange (SOFFEX) officially announced in Bürgenstock/Switzerland to create a joint trading and clearing platform. In 1998 the DTB and SOFFEX merged and became Eurex (European Exchange). Since September 1998 members of both exchanges trade by using this platform, named the Eurex® system. Eurex was one of the first exchanges providing access to derivatives markets by using a full electronic trading and clearing platform.

The new DTB software generation was installed in the middle of May 1998. The main innovation of this version is the multi-currency clearing facility to accommodate the introduction of SOFFEX products as well as the changes resulting from the Euro and the upcoming launch of currency products. The first released products, a part of those which were assumed by DTB and SOFFEX at Eurex, covered options on Euro-Schatz Futures, three-month EURIBOR Futures, Euro-Buxl® Futures as well as Futures on the Dow Jones Euro 50. In 1998 over 248 million contracts were traded by 313 registered members at Eurex.

Also in 1998, Eurex Clearing was founded as a CCP clearing house for all transactions entered into the Eurex® system. Later on in March 2003, the clearing house also performed this function for transactions on Xetra® and the Frankfurt Stock Exchange trading floor.

On 1 January 2012, SIX Swiss Exchange sold its 50-percent share in the company. Since then, Deutsche Börse Group has been the sole shareholder of Eurex.[1]

1999–2003 expansion of product range[edit]

Since 1999 Eurex provides its market participants a graphical user interface for trading. In the course of cooperation between Eurex and Helsinki Exchange Group Ltd. (HEX) new products on Scandinavian indexes and single stocks were released. In 1999 Eurex registered a noticeable growth of members (more than 400) and trading volume (around 380 Million traded contracts).

Through the year 2000 Eurex launched more and more options on Single Stock Futures on the EURO STOXX 50® Index. Equally in the next months Eurex enlarges the range of products on futures and options on the EURO STOXX® and the STOXX® Europe 600 Sector Indexes steadily. For the first time options were tradable on the most liquid U.S. Single Stocks on Eurex. Beside the establishment of futures and options Eurex creates new over-the-counter (OTC) and clearing sections. Since October 2000 Eurex has operated together with institutional market participants two new trading platforms Eurex Bonds and Eurex Repo, for government bonds trading and repo trading on government bonds.

A further milestone is the initiation of trading in options and futures on exchange-traded funds (ETFs) in 2002.

2003 one billion contracts per year[edit]

With the beginning of 2003 Eurex expanded its interest segment products for futures on the reference rate for overnight money, EONIA (European Overnight Index Average).

Deutsche Börse AG and SIX Swiss Exchange renewed the contract for their joint derivatives market Eurex ahead until 2014.

In December 2003 the limit of one Billion contracts is reached, on the whole, over 1.014 Billion contracts were traded this year.

2004 expansion to the United States[edit]

In February 2004 Eurex started the derivatives exchange Eurex US and enlarged its business model to the trading and clearing of USD-dominated products in the United States. With 1.066 billion traded contracts in 2004 Eurex achieved another record, beating its previous year record contracts.

From 1 October 2006, MAN Group assumes 70 percent of Eurex US continue proceedings under the name of USFE (U.S. Futures Exchange). In 2006, over 1.5 billion contracts were traded on Eurex, which made it by far the world’s largest international market organizer for the trading and settlement of futures and options on shares and share indexes, as well as of interest rate derivatives.

2005–2007 product expansion[edit]

As the Asian market was focused, Eurex and Osaka Securities Exchange signed a memorandum of understanding to verify possibilities of cooperation. Singapore-based traders could now trade directly on Eurex Exchange. The range of products is enhanced by the implementation of volatility index derivatives, which is for the first time offered for trading by a European exchange, as well as the launch of all Single Stock Futures on the EURO STOXX 50®, DAX® to exclusive securities on Swiss SMI®.

So called Weekly Options enhanced the product segment, so the band of equity derivatives is expanded consequently for short term maturities. The successful launch of index futures on the MDAX® and the SMIM®, as well as Spanish and Swedish underlyings further expand Eurex the portfolio of Mid Cap products.

On 19 April 2006 Andreas Preuss was appointed to CEO of Eurex, he succeeded Austrian Rudolf Ferscha as CEO.

2007 acquisition of ISE[edit]

In April 2007, Eurex Exchange acquired one of the world's leading equity options exchanges, the International Securities Exchange (ISE). In that year alone, the ISE saw turnover soaring to 800 million traded contracts. The merger created one of the largest transatlantic derivatives marketplaces.

2011 acquisition of EEX[edit]

In 2011, Eurex Group acquired a majority stake in the European Energy Exchange (EEX). This partnership further strengthened the Group’s presence in the commodity markets.

2014 product cooperation with TAIFEX[edit]

Introduction of Daily Futures (futures with daily maturity) on TAIEX derivatives of the Taiwanese derivatives exchange Taiwan Futures Exchange (TAIFEX) in May 2014.

Products[edit]

Volume development by product segments 1999-2012

Eurex Exchange offers a range of futures and options in ten asset classes:

Interest rate derivatives[edit]

The interest rate derivatives cover the German yield curve from one day to thirty-five years and the Swiss yield curve from eight to thirteen years:

  • Euro-Schatz Futures (notional short-term debt instrument issued by the Federal Republic of Germany with a term of 1.75 to 2.25 years)
  • Euro-Bobl Futures (notional medium-term debt instrument issued by the Federal Republic of Germany with a term of 4.5 to 5.5 years)
  • Euro-Bund Futures (notional long-term debt instrument with a term of 8.5 to 10.5 years)
  • Euro-Buxl Futures (notional long-term debt instrument issued by the Federal Republic of Germany with a term of 24 to 35 years)
  • CONF-Futures (notional long-term debt instrument issued by the Swiss Confederation with a term of eight to 13 years)

Furthermore:

  • One-Month EONIA Futures (underlying instrument: EONIA interest rate)
  • Three-Month EURIBOR Futures (underlying instrument: European Interbank Offered Rate)
  • Options on Three-Month EURIBOR Futures
  • The exchange covers as well the Italian yield curve with Short, Mid and Long-Term Euro-BTP Futures and the French yield curve with Euro-OAT Futures, Options on Euro-OAT Futures and Mid-Term Euro-OAT Futures.

Options can be traded on Euro-Schatz, Euro-Bobl, and Euro-Bund Futures.

Equity derivatives[edit]

In the equity segment, investors can choose between nearly 200 options on Dutch, Scandinavian, French, German, Italian, Russian, Spanish, Swiss, and U.S. equities. With Single Stock Futures Eurex offers futures on individual equities on all component issues of the European benchmark indexes EURO STOXX 50 and DAX, on all EUR- and CHF-denominated STOXX Europe 600 constituents, as well as all components of the Swiss SMI. The number of Single Stock Futures on equities which can be traded has grown constantly up to around 400.

Equity index derivatives[edit]

Eurex Exchange's equity index portfolio covers futures and options on the most liquid global, European and national indexes like the Dow Jones Global Titans 50 IndexSM, EURO STOXX 50 Index, DAX, SMI as well as derivatives on all 19 EURO STOXX/STOXX Europe 600 Supersectors and futures on five Dow Jones Sector Titans IndexesSM. Furthermore the exchange covers MSCI Indexes, the RDX USD Index, and the SENSEX, the Indian blue chip index of the Bombay Stock Exchange (BSE). Since August 2010, the Eurex/KRX Link is giving direct access to KOSPI 200 Options, the most heavily traded options contract in the world, after Korean trading hours. In cooperation with the Korea Exchange Inc. (KRX), Eurex Exchange has listed daily futures on the KOSPI 200 Options (Eurex KOSPI Product) to provide market participants trading and hedging opportunities for KOSPI 200 positions during core European and North American trading hours.

Dividend derivatives[edit]

The Single Stock Dividend Futures and equity index dividend derivatives are exchange-traded derivatives on the dividends of single stocks or complete stock indexes. Unlike the futures and options on the EURO STOXX Select Dividend 30 Index and the DivDAX Index the focus is on the distribution of dividends itself rather than the performance of the strongest dividend payers.

Volatility derivatives[edit]

In 2005, Eurex Exchange introduced volatility index futures as a new asset class. With this product innovation, investors can build up pure volatility exposure or can hedge volatility risks of equity market positions. Now, there are futures and options on the VSTOXX. They give investors a targeted and leveraged means to take a view on European volatility, based on the implied volatility derived from EURO STOXX 50 Index Options. Portfolio diversification and optimizing volatility exposure are amongst the strongest reasons to access volatility via VSTOXX derivatives.

The web tool VSTOXX Advanced Services offers a number of added benefits for professional trading. Tutorials, scripts and tools for back testing help traders to analyze data related to the VSTOXX Index, understand how the index is calculated and how to value derivatives written on it.

Commodity derivatives[edit]

Market participants have access to additional products that help them capitalize on cyclical trends in a wider variety of markets.

A strong argument for investing in commodities has been the low or even negative correlation to asset classes such as equities and bonds, which made them an interesting and attractive addition to a portfolio. Even if this characteristic became less distinct during the recent financial crisis, there are still compelling reasons that commodities will continue to develop differently based on their individual supply and demand. Furthermore, the positive correlation between commodities and inflation makes them an efficient instrument to protect a portfolio against advances in consumer prices.

Both alternative and traditional money managers have increasingly invested in commodities, resulting in high liquidity. We have seen a growing number of commodity-related ETFs and structured products – unsurprisingly, as they tended to outperform the major equity indexes during the last decade, even when taking into account the strong downturn in commodity prices in the second half of 2008. Due to continuously rising demand in China and India, the commodities segment is expected to remain a dynamic market on a global scale. In the meantime, commodity derivatives from agricultures to precious metals and from power to natural gas can be traded.

ETF derivatives[edit]

In November 2002, Eurex Exchange launched its new EXTF segment with futures and options on eight exchange-traded funds. Now, the offering includes futures and options on the most successful ETFs of the index providers iShares and CS ETF (CH), based on DAX, SMI and the EURO STOXX 50 Index, options on ten ETFs of the index provider Source, five options on Lyxor ETFs, as well as three ETFs by db-xtrackers.

References[edit]

External links[edit]