Eurex is the first European exchange to support compression services in its listed equity index business, addressing the industry-wide challenge of high cost of underlying capital for trading derivatives.
Capitalab is an established compression services provider which now offers compression of exchange-traded European equity index derivatives, starting with EURO STOXX 50 Index Options listed at Eurex.
This new service enables Eurex participants to proactively reduce their open positions and lower the capital costs of derivatives. Positions are netted against each other multilaterally, so each participant’s position is reduced. Risk parameters set by the participants ensure that the portfolio's risk position only changes within a predefined tolerance.
As a first stage, it is expected that one compression run per month will be conducted. Extension to additional products will depend on market demand.
Jean-Pierre Aubin, co-global head of brokerage at BGC Partners and CEO of Aurel BGC: “Capitalab are pleased to work with Eurex and offer compression services for one of the most liquid benchmark index options worldwide. We expect the service to provide significant capital relief, especially as client participation gains momentum.”
Michael Peters, CEO of Eurex: “We have been collaborating with Capitalab to adopt compression for our benchmark equity index derivatives. This is the solution to customer demand to optimize their outstanding positions and utilize capital more efficiently.”
EURO STOXX 50 Index Options are the fifth most traded options contracts worldwide. Open interest in EURO STOXX 50 Index Options currently stands at 34 million and EUR 1.1 trillion notional outstanding.
Eurex stands for the leading European derivatives exchange and – with Eurex Clearing – one of the leading central counterparties globally. Being architects of trusted markets characterized by market liquidity, efficiency, and integrity, we provide our customers with innovative solutions to seamlessly manage risk.
Capitalab, a division of Aurel BGC and BGC Brokers LP, provides compression services that are designed to bring greater capital and operational efficiency to the global derivatives market. It assists clients in managing the growing cost of holding derivatives, while helping them to meet their regulatory mandates. Through the Swaptioniser® service for portfolio compression of Interest Rate Swaptions, Interest Rate Swaps, Caps and Floors, Equity options, FX and FX Options, as well as its Initial Margin Optimisation service and fully automated trade processing, Capitalab looks to simplify the complexities of managing large quantities of derivatives to promote sustainable growth and lower systemic risk and to improve resiliency in the industry. The Capitalab brand is part of the Fenics fully electronic family of brands. Aurel BGC is authorised and regulated by the French regulators, the Autorité de Contrôle Prudentiel et de Résolution and the Autorité des Marchés Financiers and is based in Paris. BGC Brokers LP is authorised and regulated by the UK Financial Conduct Authority and is based in London. Aurel BGC and BGC Brokers LP are both subsidiaries of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage and financial technology company.
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