EurexUS, will it work?

Phase 2 Of Eurex Clearing Link Sent To Regulators

CHICAGO, March 14 (Reuters) - Chicago-based Clearing Corp. and Eurex US said on Monday they have submitted the second phase of their proposed global clearing link with Frankfurt's Eurex Clearing AG to U.S. futures regulators.

If approved by the Commodity Futures Trading Commission, the link would allow Eurex AG, the world's largest derivatives exchange, to trade benchmark interest rate and stock index futures 23 hours a day. The exchange says the link could save money for derivatives trading firms by facilitating clearing access to Eurex's European contracts from the United States. In turn, European traders would have access to products on the Eurex US exchange, which currently comprise U.S. Treasury futures and Russell stock index futures. In a letter to the CFTC, attorneys for Eurex US said granting permission for the link "clearly is in the public interest" and consistent with core principles of U.S. futures regulation.

"It further expands Eurex's distribution into the U.S. and Asia-Pacific region, significantly increasing access and trading opportunities," Rudolf Ferscha, chief executive officer of Eurex, said. The Clearing Corp. and Eurex Clearing AG implemented the first phase of the clearing link in November following approval by the CFTC.
 
If you look closely enough, you can see EurexUS' dying right at this moment. Volume in the Bonds is now near zero (minimized since last rollover). Russell equity futures volumes are also declining. Less than 5% of the Merc's right now.

For US products, they failed, stop.

Now the EU products will bring the decision if this will be continued
 
Quote from mcurto:

first of all, as someone who is able to watch both markets on a daily basis i would have to say that eurex US will not last. the main thing that will cause their demise is that they are not nearly as LIQUID as the CBOT treasuries. for instance, in the eurex US 10yr there is typically only about 250 cards on both sides, while the CBOT 10yr is nearly four times as LIQUID with at least 1200 cards on both sides, most of the time even more than that. so if you are an institutional trader that wants to sell 1000 ten years you will probably get them all at one price on eCBOT (sometimes you can even sell 3000 and get them all at one price). thus, that trader will save much more in terms of overall liquidity when exchange fees are minimal relative to slippage that the same institutional trader would pay for on eurex US.

JOHA, as someone who is on the floor everyday it is hard not to notice that EVERY single big bank still has desks on the floor and still use the pits to execute some big futures orders (i couldn't help but notice GOLDMAN buying 5000 ten years this morning when they easily could have done it on the screen). i have also noticed that the liquidity on eCBOT is most likely provided by a lot of the traders standing in the pit arbing the two markets.

i guess no one has confidence in the CBOT since their full memberships are trading at ALL-TIME highs and have risen from 300,000 to 950,000 since eurex has tried to take over the treasuries from the CBOT.

mcurto
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I figure/feel you pain mcurto, some illegals/legal south of the border have undercut one of my home improvement businesses for years.

I dont know enough about trading the EurexUs Russell 1k/2k contracts, enough to comment much on them;
however they are an interesting study.

Strange they dont advertise them much;
however that pace has picked up a bit last 20/50 days,
and it takes more than a low bid model to suceed.:cool:
 
Quote from TGM:

The CME is pissed at this. I have heard that they do not feel threatened. However, they are coming up with a response to make sure market share does not go to EurexUSA.

This is what I have been waiting for. No matter what happens with EurexUSA. This should drop fees at the CME. Unless they do not act. Then CME could lose market share.

As far as CME's globex engine. It is good---a hell of lot better than then it was say--- 6 years ago! With that said, the idea that the CME has to charge non members the highest fees on earth to put money into software. Well I am not buying that one. And anyone that does buy into that should pull up a chart of the CME!

The CME is doing good and could probably add more volume at a faster rate with lower fees for globex (for retail). It worked like a charm for the Cbot! And they saved off a threat from EurexUSA. If the CME is not carefull ---retail traders will line up for the ER1 and ER2. Institutions would LOVE to take the spoo business to Eurex USA and traffic in the Russell 1000. I do not know how close they are to each other (beta wise)---but know it is close enough.

Merc has lots of Haters out east and they will be lining up to yell at the CME about fees when this starts.

I will be watching and this can only be good for all traders.

Futurestrader71,

I take it you will be hooking up the Xtrader plug in that allows two exchanges for one market on one Mdtrader? for the Er2? How well does that thing work? I have not played with it. You know what talking about hopefully. I do not know the name TT uses for it. I am going to check into it. It is custom made for this type of thing.

OH FY again, just in, the CME is raising the order protocal from 400 contracts to 1500 in the mini spoo. This will help kill the pit. The CME just issued that. Most traders do not know that when the mini spoo (and naz) first came out ---you could not do more than 30 at a time.
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TGM;
Amen
on this good for all; ''a creative nudge ''FutTrader71 said.

I think you said perhaps talking about EurexUs Russell 1000 /2k
that you find it hard to believe a derivative would trade on 4 exchanges.

Maybe right but thats what our friends@ CBOE , [in a business sense ]said about the SPY options.
They kept sayng it when they got a temporary injunction against ISE for jumping the gun on trading SPY options ;
but that temporay injunction was mighty temporary.:cool:
 
Well I have moved some position trading to Eurex US. The US fixed income is indeed dead. However, you can trade the Russell products without to much of a problem. It is better for position trading because they do not tie up as much capital as the CME with those jacked up margins. They need a bit more volume for scalping. Although, if you pull up the book there is a market going in the Russell. I believe they can make inroads with these two products. CME could kill them tho. All the CME has to do is become cheaper and make their margins more realistic. If you look at the overnight margin for the ES and then compare that to the margin for the R1. You will quickly realized how jacked up they are at the CME.

Considering they don't advertise the Russell products at EurexUS-----IMO they are doing quite well. The volume they receive is purely due to CME's ignorance. The longer they hold and build on their 10% of the daily volume on the ER2 ---the more dangerous they become to the CME.

Of course this is all just my opinion and I don't care who wins.
 
Eurex move on forex signals clash with CME

By Jeremy Grant in Chicago

Last Update:4:05 PM ET June 9, 2005

Eurex plans to offer foreign exchange futures contracts this year, as the Frankfurt-based derivatives exchange tries to boost its fledgling US operation and expand global distribution of its products. The move sets the stage for a battle between Eurex and the Chicago Mercantile Exchange in one of the world's fastest-growing derivatives contracts. The CME is the only exchange to offer trading in forex futures, aside from a small dollar index product at the New York Board of Trade.

The plan is likely to signal the continued commitment to the US of Eurex's owners, Deutsche Börse and the SWX Swiss stock exchange, in spite of management turmoil sparked by the recent departure of chief executive Werner Seifert as Deutsche Börse chief executive. The new contracts would be listed on Chicago-based Eurex US but would be rolled out globally, market participants said. Eurex said: "We are always looking to expand our product offering."

The exchange would offer futures on the euro, dollar, Swiss franc, yen and cross-currencies. "The ultimate purpose is to have a second choice," said a forex specialist at a European bank. Eurex launched its US futures exchange two years ago, offering US Treasury bond futures in competition with the Chicago Board of Trade but has so far failed to take market share.

Eurex believes it stands a better chance against the CME because it will offer contracts worth $250,000 each, about double the size of contracts at the CME. This is likely to be attractive to investors such as hedge funds because it will require fewer contracts to be purchased to carry out big trades. Eurex is expected to announce its plan next week, with a launch in September. The CME last week said it would introduce a one-year incentive programme to attract big hedge funds and commodity trading advisers to its forex futures markets. Participants with more than $2bn in assets under management would qualify to trade CME forex products on the exchange's Globex electronic trading platform.
 
I don't understand why they are battling out with another electronic exchange with established product lines. They are just not offering enough to pull liquidity away from the CME.

They ought to go after NYMEX which is a sitting duck whilst it is backing pit trading. Offering 24 hours electonic trading in the major energy markets would take volume from NYMEX pretty quickly IMO.
 
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