Press

On 3 June, the electronic trading platform Eurex Bonds, which is operated jointly by the international derivatives exchange Eurex and major bond-trading houses, introduced a new market-making model. This was announced by Eurex on Tuesday. The aim of this model, developed in collaboration with market participants, is to increase flexibility in market making. According to Eurex Bonds, other institutions may then be encouraged to join the platform, which would lead to deeper liquidity. Eurex also announced a cut in market-making fees.

The Eurex Bonds joint-venture partners will permanently issue quotes for at least three of the five existing product segments. This concerns basis products, which are a combination of bond and futures contracts, as well as the two German Government bond segments: the so-called benchmark bonds, which are all bonds deliverable into the corresponding futures contracts, and cash bonds, i.e. all other tradable German Government bonds. In addition, quote obligations for the German State bond and jumbo Pfandbriefe segments may also be adopted. Institutions that are not part of the joint venture may in future select their market-making activities from the five segments.

The introduction of this new model will also reduce market-making fees. A precondition for these fees, which are significantly lower compared to the current model, is that all market-making obligations entered into are fulfilled. With this move, Eurex Bonds is adopting a model that Eurex has already successfully tried and tested on its derivatives exchange. The new model has already led to an additional three Eurex Bonds market participants taking on market-maker status since 3 June. This will further improve liquidity in all of Eurex Bonds’ product segments. The Eurex Bonds trading platform currently comprises a total of 23 banks and trading houses, 12 of which have adopted market-making obligations. Eurex believes the number of market participants and market makers at Eurex Bonds will soon increase as several international institutions are said to have shown a keen interest in participating in Eurex Bonds.