On 1 January 2005 Eurex will further strengthen its equity options segment by introducing a new market making model for European equity options trading.
Rudolf Ferscha, CEO of Eurex, said: "Our new market maker model will further increase liquidity and transparency in pan-European equity options trading, resulting in tighter spreads and better execution. Eurex offers investors the broadest spectrum of equity options, derivatives on Euro STOXX 50 components and the most comprehensive portfolio of European sector derivatives."
Eurex will introduce continuous quotation for all European equity, index and EXTF options, creating the most liquid and transparent order book for European equity options in Europe. The new market making program will leverage Eurex's product leadership and better position the exchange to attract additional order flow which is currently traded over-the counter. At the same time, this will reinforce Eurex's position as the world's leading exchange for pan-European equity options trading.
Eurex offers equity options on 44 Euro STOXX 50 components. These equities account for about 86 percent of the market capitalisation of the index.
The new market making model consists of three tiers: In addition to the existing Regular Market Making, with market makers responding to quotes, Eurex will offer market participants Permanent Market Making and Advanced Market Making for all its European equity and equity index options.
Permanent Market Making will require market makers to continuously quote for equity or equity index options. Currently, Permanent Market Making is available for selected equity and equity index options only.
The newly introduced Advanced Market Making comprises continuous quotation for pre-defined groups of equity and index options.
Options trading is supported by the electronic Strategy Wizard facility introduced in the latest Eurex software Release 7.0 in November. This functionality helps traders to better manage their options exposure and to create tailor-made options trading strategies. Key parameters of each strategy can be defined in line with the specific trading needs. The Strategy Wizard facilitates trading of up to 45 predefined strategies.