Since its launch in 1998, a pioneering spirit has always been in our company’s DNA.
We have maintained this spirit and it has made us one of the innovation leaders of our industry.
We are #Eurextraordinary
Our old brochures are mementos of our growth, our successes and sometimes our hardships. They are also reminders of our teams’ work throughout the years that have brought us to where we are now. And, who knows? History may even reveal the direction in which we are going.
Even though much has changed in 20 years, the partnership lives strong today. The Helsinki exchange is now a part of Nasdaq and Nokia, the main driver behind the partnership, went through its own significant changes. It's a testament to the partnership's strength that Nokia continued to keep its strong position in the Eurex volume charts.
The Nordic partnership has had more effects than just volume. It has strengthened our relationship with the Nordic members, we've increased the number of Finns working at Eurex and we've established a great tradition in the form of our annual crayfish party. Lots more things may change in the coming years. The need to strengthen relationships will always remain.
Introducing foreign equity options was one of Eurex’s first forays in becoming a true global exchange. Now, Eurex offers international options on more than 360 companies outside the core German segment, including weekly expirations and European-style exercise.
Eurex is a real innovator. Real innovation means that you won’t let failure stand in the way of continuing your quest for success. When I first joined the exchange in 2012, we still had credit and hurricane derivatives on the platform and only a handful of MSCI and ETF products. It is very encouraging that the company keeps experimenting. In turn, this allows us to develop innovative, best in class products that set market trends for decades, like in the case of dividends and total return futures. What wasn’t ‘best in class’ was my Chicago house. It got so cold during the winter of 2013 reaching –40C with wind chill; we just decided to stay in the office late to keep warm and had some mini-golf there over the weekends.
Reading the 2001 newsletter highlights the drastic change the derivatives landscape went through over the past 20 years. Besides the higher coverage from around 50+ to more than 750 underlyings today, the complexity has also massively increased. Whereas the single stock offering used to be limited to equity options, market participants can now trade and hedge so many components at better terms and margins. Knowing how difficult it is to build a liquidity pool in a new segment, those colleagues’ work has to be highly valued. It also highlights the fact that today's offering can only be achieved by leveraging the experience and knowledge of subject experts across all different layers, from trading to clearing. I would love to see what the 2041 newsletter would look like! The one sure thing is that the change and evolvement will be as big and exciting as it was during the past twenty years.
It’s hard to imagine that it has already been 18 years since we rolled out the idea of volatility futures in the market. The product has grown into a full suite of derivatives now, and part of so many clients trading books! Only growing wine takes more patience than product development in exchange derivatives.
What impresses me most, looking back at this brochure, is the volume achieved. 86.5 million lots in one month across Eurex is a massive success for an exchange that is only four years of age. Knowing how hard it is to grow a business, I raise a belated toast to my colleagues on their success and look forward to celebrating more successes together in the future!
The French passion is still intact after more than 17 years of trading in Eurex's French segment. With more than 160 French options and a traded volume of more than 25.8 million contracts in 2019, that 2CV has put a tiger in its engine!
France is also present in other asset classes like fixed income where Eurex launched the very successful Euro-OAT Futures on 16 April 2012, in the middle of the French presidential election campaign. The futures contract was even mentioned on French TV when protesters stood in front of the French regulator to denounce the contract, seen as a speculative instrument against the French debt.
But, never mind the critics. I think that Eurex can proudly look back on its achievements over all these years and is well equipped to face tomorrow's challenges.
Nicolas von Kageneck
Since that brochure came out, the Italian market has grown in terms of direct memberships, product range and more active involvement also from buy-side investors and retail clients. This didn’t come automatically. Our dedicated sales team takes care of the events and presentations that regularly take place in Milan and Rome. And, they work the phones hard. So, instead of discussing our products, here’s a life lesson on persistence in sales from Vincenzo with a potential client:
First call: client says: “I’ve got no time.” The second call after a month, “I’ve got no time.” The third call after another month, “I’ve got no time.” The fourth call after another month, “You are persistent.” The fifth call after another month, “Ok, now you deserve an appointment.”
Vincenzo told him that they could plan 30 minutes, but he could kick him out after five minutes. After one hour, they had to leave the meeting room, but the client asked if Vincenzo still had time to go to the coffee room.
Boys and girls; Never give up!
Vincenzo Zinna & Francesca Dell‘Era
In September 2005, we successfully launched Euro-Buxl® futures to satisfy the rising market demand for a liquid and cost-efficient hedging tool for the extra-long part of the Euro yield curve. The Buxl futures have come a long way since. They have benefited from the European Central Bank’s quantitative easing program, as investors turn to longer duration exposure in search of yield. Today, the 30-year point of the German yield curve is the only remaining tenor that has a positive yield.
Now, 15 years after the futures launch, we will be bringing the options to the market, completing our suite of futures and options on the German yield curve. Both buy and sell-side clients have expressed strong interest in listed Buxl options and we look forward to another successful launch.
Since this publication, we added quite some Spanish products to the Eurex family and gained good support from the Spanish market. The depicted winds were not always in our back though. The markets faced a financial crisis, increased regulatory scrutiny and quite some waves of volatility. And, to this day, we face headwinds from some regulators and investors who misunderstand derivatives. Nevertheless, we continue to adapt instruments to meet needs and to play an important role globally in the European market.
For some, derivatives are a safety tool. They allow investors to hedge themselves against the days that the wind blows the wrong way. For others, derivatives are a speculative tool. Through leverage, they increase their sail and get more profits on a windy day. For me, derivatives are a multifunctional tool that, like any tool, can be used, overused and misused. Therefore, apart from building great tools, our role is to continue to be the educator and ambassador of derivatives. So, not just to bring the wind, but also to be the wind of change. ¡Vamos!
Matryoshka dolls. – “Uncomplicated on the surface, but with a dozen secret selves hidden inside” (Kirsty Logan). In hindsight, symbolic of our attempts to launch Russian derivatives in 2005. Here’s what I found in my proverbial Matryoshkas, working the Russian market.
#1 – It’s uncomplicated: Back in 2005, cabs hardly existed in Moscow. Instead, random cars were stopped on the street. Our Russian speaking clients stopped a Lada for an unforgettable ride. The driver was a grim-looking, two-meter bear making us listen to Heavy Metal at about 100db. We were expecting to end up in the Moskva river until he asked us where we were from. After we told him from Germany, he started to smile and said “Дружба” (drushba). By the way, we got to the hotel.
#2 – It’s complicated: I once attended a Russian event where I talked to some fund managers about derivatives. They answered: “Why should we use derivatives? The market goes up by at least 20 percent each year! And, even though the market crashed that same year, the same discussion only lasted five
minutes longer the next year. Some became converts years later, but with each market crash, we seemed to be needing a new Russian index product. That’s another story to tell though.
#3 – Similar, but different: You may have noticed that each matryoshka is not only smaller but differs in detail, much like the design of Russian derivatives. Or as some Russian would say: “Don’t go into a monastery with your own rules” (В чужой монастырь со своим уставом не ходят).
By the way, Дружба means friendship. Exactly what I found during my journey on Russian derivatives on various levels.
In 2008, the move from click to algorithmic trading was in full swing with a 50% increase in program trading and futures transactions surging by a factor of five compared to 2006. The peak order transaction rate for a single futures product stood extremely high at 580 orders/sec. High for that time, nowadays, we see peaks of 9.000 orders/sec in FESX.
The introduction of a message-based order management interface (ETS) in April 2008 completed the set of “new” trading interfaces after the new market data interface (EBS) went live in December 2007.
The co-location service that we started offering late 2006 also became a significant success in 2008, with more than 80 member firms using co-location services.
In addition to adding capacity & speed, Eurex also pioneered the Event-Driven Risk Engine, allowing for real-time risk management – a genuinely leading-edge service.
In June 2008, Eurex was the first exchange in the world to list dividend futures with the EURO STOXX 50 Index Dividend Futures. The contract quickly established itself as a benchmark and has successfully captured most of the dividend swaps market in Europe with the help of our clients, in particular, BNP Paribas and Société Générale. Dividend derivatives have become one of the most successful products on Eurex in the past 20 years. They are a prime example of transferring OTC business to an exchange-listed environment, spawning many lookalike products globally.
It has been an interesting and sometimes bumpy ride along the way, especially in times of special corporate actions (as in the famous/infamous Vivendi case). 2020 has been the most challenging year for dividends so far, but at the same time, it resulted in the highest trading volumes in its history. The recent COVID-19 crisis has put dividends at the forefront of financial markets. It is fair to say that, after all this time, dividends have developed into an asset class in their own right.
Paul Beck & Stuart Heath
It must have been the Covid19 crisis, but we've let the Eurex KOSPI product's tenth anniversary pass by more or less unnoticed. Totally undeserved, as the KOSPI product is exceptional in so many ways. First of all, it's one of Eurex's most liquid products, ranking higher than the DAX future. Second, the product results from a prosperous, but sometimes hard-fought, cooperation with KRX. Last but not least, the product design is extremely innovative, allowing around the clock trading of KOSPI 200 options with a seamless handover between two exchanges.
I recall the Korean colleagues’ surprise that not everyone on the project from Eurex was German. Due to our international diversity, they also worked closely with team members from around the globe, namely the U.S., Switzerland and China. Nonetheless, our joint vision outweighed the multiple cultural differences bringing us to achieve our goal.
The KOSPI product's launch (and success), just one year after Eurex opened its first Asian presence, was essential to our current successful expansion into Asia. For me, more than enough reason for a belated happy birthday. 건배 (geonbae), Prost, Cheers!!!
I’ve seen my share of exchange offices. We had the Neue Börse in Hausen, the temporary ‘’Haus der Mode” and now the Cube. Walking into the Eurex Hong Kong office in 2013, though, made me think it was the smallest office in the entire company. We had room for six people and a small meeting room and shared the office with MNI and STOXX. The windows were darkened and the neighbor was a dentist. We’re a lot more corporate now, and a lot bigger. We now share the space with colleagues from Clearstream, STOXX, MD&S and 360T. Even though being in Hong Kong has expanded the physical distance to my fellow Frankfurt colleagues, working in a relatively small office with the other group entities has strengthened the Deutsche Börse family's sense.
It has been great to have been part of a journey that took us from a small six-seater office space in Singapore, doing pure sales and marketing, to multiple, full-fledged offices covering the entire Asia Pacific region. We’re all incredibly proud of what the past and current Asia teams have achieved while navigating the cultures, languages and nuances that make Asia so complex yet so unique.
The fast-pace of development in the “Asia Project” is extremely impressive. Of course, it’s not the sort of fast-pace environment I experienced during my time in New York’s concrete jungle. But, I won’t be complaining of the tranquillity found in the stunning beaches and lush greenery that Asia offers. Eurex’s fast-pace doesn’t mean you shouldn’t take any time out to unwind!
During 2012 and 2013, Eurex migrated its products from the old Classic system to T7, a major milestone for the exchange. Looking at the before and after brochures, some interesting differences can be found. Between December 2012 and the second brochure in 2013, the number of products increased by 100 from 1800 to 1900. So, the promised increased time to market already back then was a crucial element in combination with T7’s rich functionality and its high-performance latency and throughput architecture.
Since then, the T7 system has continuously evolved. It is now open for trading for 23 hours for our FX products and 21 hours for our benchmark index and fixed income futures. Also, a whole slew of functionalities, such as Eurex EnLight and new pre-trade limits, have been added. T7 has continuously advanced while staying state of the art from a technology and latency perspective. Still, we work hard on further improving our T7 platform to remain best in class industry-wide. This will remain of key importance to combine reliability, performance, flexibility and full functionality.
There is much more ahead, and we will continue to improve the platform while listening to our customers to address their needs.
Imitation is the sincerest form of flattery. I recently looked into some “brand new” 2020 developments in some of our peers’ risk methodologies. CME launching SPAN 2, HKEX launching NextGen Risk Management. Under the hood, putting it side to side with this 2014 brochure, it looks very familiar; Historical VAR, Stress VAR, Liquidity, Concentrations, and portfolio offsets. It also shows how innovative this organization has always been. We made a few lasting decisions on methodology back then, and I’m honored to have been a part of that team.
From its early days in 2014, our MSCI markets have grown and morphed into a segment to be reckoned with. Not only have volumes and open interest increased exponentially – several structural shifts have taken place. Real buy-side flow has come into these products; order books have gotten better and participation from the U.S. and Asia has brought additional flows and liquidity.
Our strategy to increase our offering has paid off and we see flows from Canada to Japan (and everywhere in between!).
It is nice to see Eurex being embraced as a global exchange. Our expanded product offering, bigger global presence and increasing client base outside of Europe have contributed significantly to this. I see that often in our interaction with U.S. and Canadian clients, who progressively consider Eurex amongst their top three market venues.
EurexOTC Clear was a revolutionary innovation back in 2016. The model was probably ahead of its time and received resistance from large, balance-sheet-strong global dealers.
Now, the model is getting stronger adoption in the repo space and has currently been expanded to cover additional client types like Hedge Funds. Resistance is not something to be feared. It merely means you’re probably on the right track but hitting someone else’s profit model. That should never stop innovation. I remember when we presented the Wyman study on the future of central clearing. It was our first attempt to quantify our strategy that is still actual today – an integrated cross-product CCP with a focus on EUR denominated products. The paper was published and presented at the ISDA Annual Meeting in Munich. Eurex sponsored that event for the first time with a big stand and an Octoberfest type reception, including our study’s publication. ETD Eurex attacking the OTC market in its home turf at their big annual meeting. An explosive atmosphere… – we not only made friends but got attention as well.
Safety and efficiency have always been at the center of our value proposition. But, to deliver the value proposition successfully to the market, you need partners – the Partnership Program of OTC IRD was a key enabler to grow our market share from 3% to almost 20% in 30 months. We are convinced that these are the right ingredients to complete our vision to build the Home of the Euro Yield Curve.
Eurex EnLight is an exciting project aiming to bring large and complex transactions into the listed and electronic environment. It’s also a challenging project as established workflows have to be understood, transferred into an electronic set-up and participants need to be convinced that this is actually superior to the call-around market.
Since its launch, more than three million contracts were traded on Eurex EnLight. But our ambition level is much higher. That’s why we are continuously in contact with market participants, listening to their feedback, try to incorporate this into the functionality and think about other ways to make Eurex EnLight the place for off-book price formation.
There’s a lot of team spirit in this project as Eurex EnLight is a product resulting from several departments’ joint efforts. And team spirit is needed as not everything is easy. I remember a customer shouting at me because we were daring to touch the off-book’s current market structure. And I remember how proud we all felt when the first trades were coming through, and how disappointed we felt when we realized that this is more of an uphill battle than we expected. Regardless, we stay confident. If anything can be learned from these “historical” brochures, it’s that we have the right people, the right technology and the right ideas. You can also learn that this exchange is a true innovator. And innovators sometimes just need patience to get time on their side as well.
When I started in 2014 – there was no Derivatives Forum, COVID 19 was unimaginable, and my son was not born! Well, we all know COVID now, and I've had my parental leave. In the meantime, we grew the forum from a 60+ attendees workshop into a series of forums covering all asset classes and initiatives, with 540 people attending just before physical events were outlawed.
As a wise person once put it, "Such a conference is like a swan swimming on a lake: on the surface elegantly flowing along, while beneath the surface, it's wildly paddling to get forward." But, forward we move. The decision to host a virtual edition of the Frankfurt Forum next year wasn't easy, but in the end, the only realistic one. With Paris, Amsterdam and London coming in the second half of 2021, hopes are alive to meet people again to network and exchange ideas in person.
We've had such an exciting and successful past. Now, the new branding and new website will pave the way to an equally exciting and successful future for our teams.
Create better markets
The strong collaboration with our business partners enabled us to become the globally trusted home of trading, clearing and risk management. With this rebranding we want to convey to the market that we continue to innovate and shape the markets further with our unique pioneer DNA. Our expertise and engagement will expand the strong relationships, deliver innovative products and services that drive continuous growth. I count on you as the Eurex team for an exciting future!
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