Press

Eurex, the new cross-border European derivatives market of Deutsche Börse and the Swiss exchange, is taking shape. The two major electronic derivatives exchanges, DTB Deutsche Terminbörse and the Swiss Options and Financial Futures Exchange (SOFFEX), will merge into Eurex this fall. They will then have a uniform technological platform, a harmonized set of rules and regulations and a joint clearing house. Eurex CEO Dr. Jörg Franke made the announcement to journalists in Frankfurt on Wednesday.

The technical platform for Eurex will be implemented in two steps. The new DTB software generation that will be installed in the middle of May is already Eurex Release 1.0. 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. In the second step, further functionalities of the existing SOFFEX version 4.4 in particular will be integrated into Eurex Release 2.0 by this fall; as of that time, trading in all products will take place via a uniform platform and the SOFFEX host will be switched off.

According to Franke, SOFFEX members can already make use of Eurex Release 1.0, which enables trading in DTB products at no additional cost, while allowing the participants to adjust their systems at an early stage. At this time, SOFFEX products will still be running on the SOFFEX system that will be switched off when Eurex is launched in the fall. "Our vision of creating a cross-border market as the core of a pan-European derivatives exchange will become a reality when we introduce Eurex version 2.0 in the fall," Franke said.

Deutsche Börse and the Swiss Exchange expect the DTB-SOFFEX merger to deliver synergy effects which could then be passed on to the market participants in the form of price reductions. The new exchange will also have considerable advantages for the market participants due to the cross-border clearing. Otto E. Nägeli, the Eurex deputy CEO and responsible for clearing, stated that the uniform system platform for clearing will result in lower margin requirements for some products and tie up less liquidity. All that Clearing Members will need for physical deliveries and provision of collateral in Swiss francs and deutschmarks and/or in euro is their local securities depository. An account at Deutsche Börse Clearing will ensure clearing in other currencies.

Changes and innovations will also be made in the Eurex products. The product-specific conversion of the relevant products, for example, will be made in time for the euro's introduction on January 4, 1999. Moreover, several new products will be launched over the next few months: Options on the Three-Month Euromark future and options on the two-year German Treasury notes future ("Schatz Future") are being launched on February 12. They will later be followed by, among others, Jumbo bond futures and derivatives on the new European equity indices.