Derivatives exchange Eurex will introduce a new pricing model on 1 February 2011.
The overarching goal is to further increase the attractiveness of the Eurex marketplace by offering incentives for market quality and volume contribution as well as fee reductions in a number of key products.
“The new pricing model is designed to further encourage volumes, enhance order book quality and attract new customers. Our new model will help fuel growth in trading volumes across key product segments,” says Andreas Preuss, chief executive of Eurex.
The enhancement of order book trading shall support market transparency and price discovery. To achieve this goal, the highest proportion of incentives will be given to market makers in exchange for providing value to the order book. Additionally, the two current market making schemes will be further differentiated to reward market makers according to their market quality contributions.
Members who provide significant trading volume will benefit from modified rebate schemes for both futures and options products.
The existing fee caps for block trades in options will be replaced by a staggered fee model. Additionally, proprietary traders will receive volume rebates that are valid for both order book and block trades.
Furthermore, end customers will directly benefit from lower transactions fees for a number of key index options, single equity options and single stock futures. For example, transaction fees in DAX options will be reduced from 75 to 50 euro cents and fees for equity options will be reduced from 20 to 10 euro cents.
Other measures under the new pricing model include the removal of the minimum quarterly transaction fee to lower entry barriers for new trading firms. Additionally, in the first quarter 2011 the contract sizes of selected single equity options and single stock futures will be increased to comply with international standards. As a result, the number of traded contracts is expected to decrease while fees in these products will become more attractive.
On aggregate Eurex participants will benefit from approximately EUR20m in lower fees annually based on 2010 volume figures. Due to the expected growth in trading activity as result of the new pricing model, Eurex estimates a largely neutral effect on sales revenues.
