Eurex, the world's largest derivatives exchange, has entered into a long term global clearing partnership with The Clearing Corporation, the largest independent futures clearing organisation in the US.
Under the agreement, The Clearing Corporation becomes Eurex's partner of choice to clear trades on its new all-electronic U.S.-based exchange to be established in early 2004.
Eurex CEO Rudolf Ferscha said: "The Clearing Corporation and Eurex will create great value for customers and accelerate growth throughout the industry. This agreement forms an unprecedented industry partnership and marks a significant milestone in our plans to launch a U.S. exchange in early 2004. Through this partnership Eurex teams up with the leading industry participants in the U.S market to provide the best services for the industry worldwide."
The global clearing partnership will give customers of The Clearing Corporation direct access to Eurex's European products. At the same time Eurex customers worldwide will be able to clear Eurex's U.S. products, as introduced, via both Eurex Clearing as well as The Clearing Corporation.
For the first time customers will be able to leverage their existing infrastructures to access both U.S. Dollar- and Euro- denominated products through the global clearing partnership. As a result customers will save up to 95 percent of their current margin requirements, substantially increasing the efficiency of capital employed. This will be achieved by enhanced cross margining and reduced collateral through the use of collateral pools for a wider range of products.
Customers will also benefit from full fungibility, allowing them to open positions in the European market and close them in the U.S market and vice versa.
Background Note: The Board of Trade Clearing Corporation is a Delaware corporation now in its 78th year of business. The company is owned by 87 clearing member stockholders, who represent the world-wide derivatives marketplace participants and market makers, and is the only active independent futures clearinghouse in the world. The Clearing Corporation is the largest clearing organization for futures in the U.S and clears over 98 percent of all U.S capital market derivatives. The Clearing Corporation offers clearing services for multiple exchanges and market places.
Eurex is the world's leading futures and options market for derivative instruments and the largest derivatives clearing organisation in the world. Total clearing volume on Eurex exceeded 801 million contracts in 2002. It provides access to a broad range of international benchmark products: Eurex operates the world's most liquid fixed income markets, with 450 million contracts traded in the 2, 5 and 10 year euro interest rates. At the same time, Eurex is the leading exchange in European index products with a market share of over 70 percent. Furthermore, in the equity options business Eurex has traded contracts with an underlying value of 583 billion Euro in 2002, making it the largest equity options market worldwide. Eurex has developed and currently operates the successful a/c/e trading platform which trades more than 80 percent of all U.S. bond futures. a/c/e and Eurex utilise the same trading platform and the global Eurex network and Eurex will continue to use this infrastructure for the new exchange.
Copyright Hedgeweek 2003