FINANCIAL POSITION:

Eurex, the German-Swiss derivatives exchange which is seeking to enter

the US market next month, traded a record number of contracts last year
making it the world's largest derivatives exchange.It traded one billion
contracts in 2003, 27% more than the previous year when 801m contracts
were traded. The volumes make it the largest derivatives exchange in the
world.

The news will buoy the exchange at a crucial time as it battles opposition
to the US Futures Exchange, its US arm which it plans to open in
February. The dominant US derivatives exchanges, the Chicago Board of
Trade and the Chicago Mercantile Exchange, are fiercely …
PRODUCTS:
Trading on Eurex is simply a must to cover your exposure to the
European financial markets. Our diversified product suite covers
various asset classes and includes some of the world's most heavily
traded futures and options contracts. The product range comprises:

• Interest Rate Derivatives (f.e. Euro-Bund Futures, Euro-Bobl

Futures)
• Equity Derivatives (Equity Options and Single Stock Futures based
on European, Brazilian and US underlyings)
• Equity Index Derivatives (f.e. EURO STOXX 50® Index Futures,
DAX® Futures, SMI® Futures)
• Equity Index Dividend Derivatives
• Volatility Index Derivatives
• Exchange Traded Funds Derivatives
• Credit Derivatives (iTraxx® Europe 5-year Index Series, iTraxx®
Europe HiVol 5-year Index Series, iTraxx® Europe Crossover
5-year Index Series)
• Inflation Derivatives
• Commodity Derivatives (Agriculture Derivatives, Gold and Silver
Derivatives, Power and CO2 Derivatives in cooperation with
EEX)
• Weather Derivatives
• Property Derivatives
Various informations and services are available for each product
category:
 Product Search
Publications
Wholesale Trading
Facilities

Strategy WizardSM

Market Model & Functionalities

The core element of the Eurex Market Model is the central order
book, into which all orders and quotes are entered during the
trading day.

The only purchase and sale transactions that do not go through the
central order book are OTC transactions (where the price is agreed
off-exchange and then recorded at Eurex Clearing AG for clearing
and settlement purposes), as well as clearing and settlement-
related transactions like option exercises/assignments and
notifications/allocations against positions in Fixed Income Futures.

Eurex is one of the world's leading derivatives exchanges, providing

European benchmark derivatives featuring open and low-cost electronic
access globally. Its electronic trading and clearing platform offers a
broad range of products, and amongst others operates the most liquid
fixed income market. Eurex was established in 1998 with the merger of
Deutsche Terminbörse (DTB, the German derivatives exchange) and
SOFFEX (Swiss Options and Financial Futures).
Eurex is considered one of the "big three" derivative exchanges[by
whom?], along with NYSE Euronext Liffe and the Chicago Mercantile
Exchange. It is owned by Deutsche Börse and SIX Swiss Exchange.

On December 13, 1996 Deutsche Börse AG and Swiss Exchange

signed a memorandum of understanding to create a joint trading and
clearing system.
Eurex was formed on September 4, 1997 when DTB and SOFFEX
officially announced in Bürgenstock/Switzerland to create a joint
platform. In 1998 the DTB (Deutsche Terminbörse) and SOFFEX
(Swiss Options and Financial Futures Exchange) merged and became
Eurex (European Exchange). Since September 1998 members of both
exchanges trade by using a joint trading and clearing platform. Thereby,
becoming one of the first exchanges providing access to derivatives
markets by using a full electronic trading and clearing platform. Eurex, is
jointly owned by Deutsche Börse and SWX Group.
Eurex Deutschland is the public law arm of Eurex. Eurex Release 1.0.:
The new DTB software generation was installed in the middle of May
1998. The main innovation of this version is the multi-currency clearing
facility to accommodate the introduction of SOFFEX products as well as
the changes resulting from the Euro and the upcoming launch of
currency products. The first released products, a part of those which
were assumed by DTB and SOFFEX at Eurex, covered options on
Euro-Schatz-Futures, three-month-EURIBOR-Futures, Euro-Buxl-
Futures as well as Futures on the Dow Jones Euro 50. In 1998 over 248
Million contracts were traded by 313 registered members at Eurex.
Since 1999 Eurex provides its market participants a graphical user
interface for trading. In the course of cooperation between Eurex and
Helsinki Exchange Group Ltd. (HEX) new products on Scandinavian
Indices and Single Stocks were released. In 1999 Eurex registered a
noticeable growth of members (more than 400) and trading volume
(around 380 Million traded contracts).
Through the year 2000 Eurex launched more and more options on
Single Stock Futures on the EURO STOXX 50. Equally in the next
months Eurex enlarges the range of products on futures and options on
the EURO STOXX and the STOXX Europe 600 sector indices steadily.
For the first time options were tradable on the most liquid U.S. Single
Stocks on Eurex. Beside the establishment of futures and options Eurex
creates new OTC (over the counter) and clearing sections. Since
October 2000 Eurex operates together with institutional market
participants two new trading platforms Eurex Bonds and Eurex Repo,
for government bonds trading and Repo trading on government bonds.
Through a multitude of new products as well as steady improvement of
trading and clearing terms and conditions Eurex achieved a new record
turnover: more than 674 Million traded contracts in 2001. A further
milestone is the initiation of trading in options and futures on exchange-
traded index fund shares, so-called exchange-traded funds (ETFs) in
2002. In the same year a level of more than 800 Million contracts was
reached through the enhanced range of sector products as well as
options on more and more single stocks from all of Europe and USA.
With the beginning of 2003 Eurex expanded its interest segment
products for futures on the reference rate for overnight money, EONIA
(European Overnight Index Average). The EONIA future is tradable
worldwide from 648 member locations, 96 of them in the USA, making it
one of the most important single markets for Eurex. Deutsche Börse AG
and SIX Swiss Exchange renewed the contract for their joint derivatives
market Eurex ahead until 2014. In December 2003 the limit of one
Billion contracts is reached, on the whole, over 1.014 Billion contracts
were traded this year.
In February 2004 Eurex started the derivatives exchange Eurex US and
enlarged its business model to the trading and clearing of USD-
dominated products in the US. With 1.066 Billion traded contracts in
2004 Eurex achieved another record, beating its previous year record
contracts.
With the beginning of 2005, Deutsche Börse AG receives 85 percent of
the joint venture proceeds, SWX Swiss exchange receives 15 percent.
As the Asian market was focused Eurex and Osaka Securities
Exchange signed a memorandum of understanding to verify possibilities
of cooperation; Singapore-based traders could now trade directly on the
world's largest derivatives exchange Eurex. The range of products is
enhanced by the implementation of Volatility Index Derivatives, which is
for the first time offered for trading by a European Exchange, as well as
the launch of all Single Stock Futures on the EURO STOXX 50, DAX to
exclusive securities on Swiss SMI. The trading volume increased again
to more than 1.25 Billion contracts.
On 19 April 2006 Andreas Preuß was appointed to CEO of Eurex, he
succeeds Rudolf Ferscha as chief executive officer.
So called Weekly Options enhanced the product segment, so the band
of Equity Derivatives is expanded consequently for short term
maturities. The successful launch of Index Futures on the MDAX and
the SMIM, as well as Spanish and Swedish underlyings further expand
Eurex’s portfolio of Mid Cap products. The efforts for the Asian market
make an impact: the first Eurex-connection of a member in Singapore is
implemented.
From 1 October 2006 MAN Group assumes 70 percent of Eurex US
continue proceedings under the name of USFE (US Futures Exchange).
In 2006, over 1.5 Billion contracts were traded on Eurex, which made it
by far the world’s largest international market organizer for the trading
and settlement of futures and options on shares and share indices, as
well as of interest rate derivatives. The trading volume and clearing of
derivatives market products increased year-on-year: Eurex-customers
traded 1.526 Billion contracts, which is 22 percent more than in the
previous year (1.248.8 Billion contracts). Sales increased about 19
percent up to 597.8 Million Euros.
On 30 April 2007 Eurex and International Securities Exchange (ISE)
announced that they have signed a definitive agreement under which
Eurex will acquire ISE for approximately USD 2.8 Billion in cash or USD
67.50 per share. The combination will be implemented by way of a
merger and is subject to approval by the holders of a simple majority
(50 percent plus one share) of ISE outstanding common stock at a
special shareholder meeting to be held as soon as practicable, receipt
of regulatory approval by the U.S. Securities and Exchange
Commission and other customary closing conditions. ISE’s Board of
Directors recommends to shareholders to vote in favour of the
transaction.
[edit]
Products
Eurex offers a full range of equity, equity-index, and volatility-index
exchange-traded funds, with credit derivatives, interest-rate derivatives,
inflation derivatives, and CO2 derivatives.
[edit]
Equity derivatives
In the equity segment, investors can choose between nearly 200
options on Dutch, Scandinavian, French, German, Italian, Russian,
Spanish, Swiss, and U.S. equities. With Single Stock Futures Eurex
offers futures on individual equities on all component issues of the
European benchmark indexes EURO STOXX 50 and DAX, on all EUR-
and CHF-denominated STOXX Europe 600 constituents, as well as all
components of the Swiss SMI. The number of Single Stock Futures on
equities which can be traded has grown constantly up to around 400.
[edit]
Equity-index derivatives
Equity index products include futures and options on leading global,
pan-European and national blue chip indexes, pan-European and
national mid cap and various sector indexes.
Products in detail:
• Futures and options on the EURO STOXX 50 Index
• Futures and options on the STOXX Europe 50 Index
• Futures and options on the STOXX Europe 600 Index
• Futures and options on the STOXX Europe Mid 200 Index
• Futures and options on the Dow Jones Global Titans 50 Index
• Futures and options on the Dow Jones Italy Titans 30 Index
• Futures and options on the DAX, MDAX, and TecDAX
• Weekly options on the EURO STOXX 50 Index, DAX, and SMI
• Futures and options on the OMX Helsinki 25 Index
• Futures and options on STOXX Europe 600 Sector Indexes
• Futures on RDXxt USD
[edit]
Volatility-index derivatives
In 2005, Eurex introduced volatility index futures as a new asset class.
With this product innovation, investors can build up pure volatility
exposure or can hedge volatility risks of equity market positions. The
Vola Futures are based on the volatility indexes VSTOXX, VDAX-NEW,
and VSMI, covering pan-European, German, and Swiss equity markets.
Products in detail:
▪ VDAX-NEW Futures
▪ VSTOXX Futures
[edit]
Exchange-traded fund derivatives
In November 2002, Eurex launched its new EXTF segment with futures
and options on eight Exchange Traded Funds. The underlying
instruments are:
▪ DAX EX
▪ EURO STOXX 50 EX
▪ iShares EURO STOXX 50 EX
▪ XMTCH on SMI
[edit]
Credit derivatives
Eurex has introduced the world's first exchange-traded credit derivatives
contracts on March 27[when?][citation needed]. Credit derivatives offer
market participants the opportunity to hedge against credit events such
as corporate defaults, failure to pay or restructuring:
▪ futures based on the iTraxx Europe 5-year index series (equally
weighted portfolio of the 125 most liquid European investment
grade credit default swap (CDS) entities an equally weighted
portfolio of the 125 most liquid European investment grade credit
default swap (CDS) entities)
▪ iTraxx Europe HiVol 5-year index series (equally weighted portfolio of
the 30 entities with the highest spread from the iTraxx Europe 5-
year index)
▪ iTraxx Europe Crossover 5-year index series (equally weighted
portfolio of 50 European sub-investment grade entities. All iTraxx
indexes are provided by International Index Company Ltd. (IIC))
The Eurex iTraxx credit futures will[when?] closely mimic the risk
structure of credit default swaps traded in the over-the-counter (OTC)
market. The products will[when?] be cash settled, with reference to the
iTraxx index values of IIC.
[edit]
Interest-rate derivatives
The interest rate derivatives cover the German yield curve from one day
to 35 years and the Swiss yield curve from eight to 13 years:
▪ Euro-Schatz Futures (notional short-term debt instrument issued by
 the Federal Republic of Germany with a term of 1.75 to 2.25
years)
▪ Euro-Bobl Futures (notional medium-term debt instrument issued by
the Federal Republic of Germany with a term of 4.5 to 5.5 years)
▪ Euro-Bund Futures (notional long-term debt instrument with a term of
8.5 to 10.5 years)
▪ Euro-Buxl Futures (notional long-term debt instrument issued by the
Federal Republic of Germany with a term of 24 to 35 years)
▪ CONF-Futures (notional long-term debt instrument issued by the
Swiss Confederation with a term of eight to 13 years)
Options can be traded on Euro-Schatz, Euro-Bobl, and Euro-Bund
Futures.
Further products in the interest rate derivatives segment:
▪ One-Month EONIA Futures (underlying instrument: EONIA interest
rate)
▪ Three-Month EURIBOR Futures (underlying instrument: European
Interbank Offered Rate)
▪ Options on Three-Month EURIBOR Futures
The interest rate derivatives add up to approximately half of the trading
volume at Eurex[citation needed].
Euro-Bund Futures are the dominant contracts as they generate – with
more than one million traded contracts per day – the highest
turnover[citation needed].
[edit]
Eurex Bonds and Eurex Repo
The Eurex Business Model does not only include futures and options,
but also OTC (over the counter) cash market transactions.
[edit]
Eurex Bonds
Eurex Bonds was launched in October 2000 as an ECN for off-
exchange, “wholesale” trading in cash bonds and is a joint initiative of
Eurex Frankfurt AG and 11 leading financial institutions in Europe. It
offers an electronic platform for ex-pit trading and clearing of:
▪ all fixed income treasury bonds of the Federal Republic of Germany
(Federal Treasury Notes, Federal Notes, Federal Bonds)
▪ Interest-free Treasury discount papers (Bubills) of the Federal
Republic of Germany
▪ European government bonds
▪ Bonds (Agencies) of supranational institutions and government
guaranteed bonds
▪ German Jumbo Pfandbriefe (Jumbo Mortgage Bonds) of German
issuers, fixed income treasury bonds of the German federal
states as well as so-called “Slimbos”
▪ Covered Bonds from various European issuers
▪ Selected European Corporate Bonds
▪ Underlying instruments for all bonds of the Federal Republic of
Germany which are deliverable to Fixed Income Futures (Euro-
Schatz, Euro-Bobl, and Euro-Bund Futures)
▪ Underlying instruments for selected fixed income bonds of the Federal
Republic of Germany which are not deliverable to Fixed Income
Futures (Euro-Schatz, Euro-Bobl, and Euro-Bund Futures)
Through the basis trading and the connection to the clearing system of
Eurex Clearing AG, Eurex Bonds offers a direct link between the cash
market and the futures market. This enables electronic basis trading via
a central order book.
[edit]
Eurex Repo
Eurex Repo is the electronic trading solution for repos (sale and
repurchase agreements). In its Euro segment, standardized baskets for
the General Collateral (GC) market, the German GC Basket, the
German Jumbo Basket and the German KfW/Laender Basket (bonds
issued by the Kreditanstalt für Wiederaufbau and the German federal
states) are offered. Market participants can also trade Repos with
Austrian Government Bonds and Treasury Bonds of the European
Investment Bank as securities The German GC Basket comprises all
German government bonds and bonds issued by the privatization
agency (Treuhandanstalt). The German Jumbo Basket comprises
Jumbo Mortgage (Pfandbrief) bonds issued by German companies. The
KfW/Laender Basket comprises KfW bonds and bonds of the German
federal states.
Eurex Repo operates the Swiss Franc Repo Market and the Euro Repo
Market.
The Euro Repo Market allows financial service providers across Europe
to access a full range of refinancing instruments using European
securities. With Eurex Repo, financial institutions are able to use
defined GC (General Collateral) baskets to optimize their liquidity
management, as well as to benefit from the market transparency that is
inherent to an electronic trading system.
Over a hundred international banks use the Swiss Franc Repo Market
to manage their liquidity. Market participants from Switzerland as well
as from abroad can execute their funding and collateral management
operations directly in the Swiss Franc interbank market and take part in
the liquidity-auctions conducted by the Swiss National Bank (SNB),
which take place almost daily.
Eurex Repo stands for the seamless integration of trading, clearing and
settlement of repo transactions in the European and Swiss repo market.
Eurex Clearing AG acts as the central counterparty between buyers and
sellers, thereby guaranteeing anonymity, efficient risk management and
swift settlement at all times.
Participation in the Eurex Bond and Eurex Repo Market is generally
open to all banks and financial service providers. Participants must be
subject in their country of domicile to a financial market supervisory
authority. For private investors, trade at Eurex Repo is not possible at
present, as it is a mere interbank market.