Press

The Chicago Board of Trade (CBOT) in the U.S. and Deutsche Börse and Schweizer Börse (SWX), the partner companies of EUREX, the organization which shall run German-Swiss derivatives market, are planning a far-reaching alliance aimed at giving market participants worldwide more expanded trading opportunities at each exchange.

CBOT Chairman Patrick H. Arbor and Eurex CEO Dr. Jörg Franke announced a Letter of Intent for the trading alliance at a news conference here today at an annual industry conference. The initiative was approved by the CBOT Board of Directors at its March 17 meeting.

The exchange heads of CBOT and EUREX said this cooperation between the United States and Europe is the basis for a global derivatives market and eventually will be rounded out with a strategic partner from the Asia-Pacific region. The strategic objective is to enable the members of CBOT and Eurex to directly trade the world's benchmark derivatives products.

The first phase of the agreement, scheduled to be operational during the fourth quarter of 1998, calls for a common global communications network for the CBOT's after-hours electronic trading system, Project A, and EUREX. Project A users at that time also will be able to emulate the EUREX screen on Project A work stations.

The second phase of the agreement, to be operational by the second quarter of 1999, will enable Project A and EUREX users to access both markets from a single screen, including the routing of orders to CBOT members for execution on the exchange's trading floor.

The partners also have reached an agreement regarding the products: CBOT will cover the trading of financial derivatives in currencies from North America, as well as all agricultural products globally. EUREX will concentrate on financial derivatives in all European currencies. A joint strategy will be developed for products from other countries. There will be no dual listings of products.

CBOT Chairman Patrick H. Arbor said, "This alliance, once finalized and approved by our Board of Directors, will result in increased trading opportunities for our members. It represents an outstanding opportunity for us to partner globally with a leading overseas exchange. It will enhance both the CBOT's daytime open outcry markets and our after-hours electronic trading system. Under the agreement, we will vastly increase the global distribution of Project A, allow our members electronic access to EUREX products, and allow EUREX's many members access to our daytime markets through our members on the floor."

Eurex CEO Dr. Jörg Franke said, "This alliance is more progress in our internationalization strategy. It adds liquidity to our market and allows our members easy and cost-efficient access to a wide range of new products."

CBOT President & CEO Thomas R. Donovan said, "This agreement is designed to bring the dual benefit of increased order-flow to our trading pits and Project A, while lowering our costs for electronic trading and improving the efficiency of electronic order routing to the floor. It is in line with our strategic plan to operate the world's best open outcry market and after-hours electronic trading system. It will provide our members with additional business opportunities and choices."

The alliance is open for other exchanges who are willing to share the CBOT-EUREX technology concept. The CBOT will not enter into a similar agreement with other derivatives exchanges in Europe (except for exchanges that trade agricultural products only), and Eurex will not enter into a similar agreement with other derivatives exchanges in the U.S. (except for exchanges that trade equity-related options products) without the consent of the parties to the agreement. According to Franke, this agreement will not have any effect on the Euroalliance, the cooperation agreement between Eurex and the French derivatives markets. "The cooperation with CBOT opens up new perspectives for Euroalliance," Franke said.

Joint press release of Chicago Board of Trade, Deutsche Bourse and Swiss Exchange.