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The commodity cooperation: Eurex Exchange and EEX

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The leading international derivatives marketplace Eurex Exchange and the European Energy Exchange (EEX) have been successfully cooperating in trading of energy and related products since December 2007. Thanks to this cooperation, Eurex trading participants have access to products of the primary and secondary market that are listed at EEX.

The “plug & play” approach allows Eurex members to trade EEX products via their existing infrastructure and connectivity. The only prerequisite to access the EEX order book is the admission as an EEX trading participant through a lean admission process.

More than 27 Eurex trading participants have been admitted since the start of the cooperation and use this channel to access the EEX market. Among those you will find a variety of leading banks, brokers and funds. With the financial crisis in mind, more and more investors of the financial community choose to extend their investment focus and diversify their portfolios.

Initially, the cooperation started with CO2 emissions trading, namely with EUA Futures (European Emission Allowances) and CER Futures (Certified Emission Reductions), and continued to be expanded with the offering of the power derivatives Phelix Futures and Options as well as French Financial Power Futures.

In a next step, the initial cooperation product suite has been extended by EUAA Futures (EU Aviation Allowances) and ERU Futures (Emission Reduction Units).

Recently, the cooperation has added two more product groups. In April 2012, natural gas futures for the NetConnect Germany (NCG) and Gaspool (GPL) gas market were included for trading and clearing via Eurex Exchange. The NCG Natural Gas Futures and GPL Natural Gas Futures have monthly, quarterly, seasonal and yearly expiration cycles.

In July 2012, cash-settled, USD-denominated coal futures on the API 2 and API 4 Index followed. The futures are based on the coal price indexes from the Argus/McCloskey Report for the markets in Amsterdam, Rotterdam, Antwerpen (ARA Futures) and Richards Bay, South Africa (RB Futures). They are available with monthly, quarterly and yearly maturity cycles.

The clearing houses of the two exchanges, European Commodity Clearing AG (ECC) and Eurex Clearing AG cooperate in settling the transactions and offer efficient and flexible clearing solutions. Trading participants can use their existing clearing relationships for on- and off-exchange trading and benefit from process synergies, optimized risk management and collateral pledging across various EEX product groups. Bilaterally closed transactions can be entered into the EEX trading system, and clearing will be processed automatically.

Apart from the commodity offering of the Eurex/EEX cooperation, Eurex Exchange covers a wide range of commodity derivatives. The portfolio includes futures and options on the reputable Dow Jones-UBS Commodity IndexSM family with its nine selected sub-indexes, precious metals (gold, silver and Xetra-Gold®) and agricultural products (potatoes, piglets, hogs, butter and skimmed milk powder).

Commodity derivatives help market participants to capitalize on cyclical trends in a wider variety of markets. This makes them an interesting addition to a portfolio. Eurex Exchange continuously increases its offering as part of its strategy to offer hedging and investment opportunities for its clients in all relevant asset classes.

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