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ETF options: Introduction of a new Liquidity Provider scheme and discontinuation of previous schemes

Release date: 28 Nov 2019 | Eurex Exchange

116/2019 ETF options: Introduction of a new Liquidity Provider scheme and discontinuation of previous schemes

Eurex Circular 116/19

1.    Introduction

The Management Board of Eurex Deutschland and the Executive Board of Eurex Frankfurt AG took the following decisions with effect from 1 January 2020:

  • Introduction of a new, combined Liquidity Provider (LP) scheme for ETF options 
  • Discontinuation of four ETF-related LP schemes

Production start: 1 January 2020

This circular contains information on the introduction of the new LP scheme and the respective Product Specific Supplement as attachment, as well as the list of schemes to be discontinued.

2.    Required action

Liquidity Providers, who are active in ETF options which are part of the new LP scheme, should ensure that from the production start they will use the latest MMPM parameter file for the updated quote requirements, available on the Eurex website www.eurexchange.com under the following link:

Trading > Market-Making and Liquidity provisioning > Program, Product, Size and Spread details

3.   Details of the initiative

Overview of the new scheme

The new scheme will combine all existing incentives for ETF options in a single, clear Product Specific Supplement. It will additionally include a new package with all iShares ETF options from three asset classes – equity, fixed income and commodities (including the announced upcoming product launch on 9 December 2019, see Eurex circular 106/19). Fee rebates and revenue sharing will be offered to Liquidity Providers who fulfil the requirements. The incentives of the new LP programme can be summarised as follows:

  • General: Single ETF options: up to 60 percent basis building block fee rebate (equity, fixed income and commodity)
  • Package 1: All Equity ETFs: 30 percent package rebate and 30 percent revenue share
  • Package 2: All iShares ETFs: 30 percent package rebate and 2 percent revenue share (€400,000 annual cap on Commodity ETFs)

Please refer to the attachment for scheme details.

The following existing schemes for ETF options will be discontinued:

  • (discontinued) Equity 04 – Options on Equity ETFs
  • (discontinued) Equity Index 38 – Options on Exchange-Traded Commodities
  • (discontinued) Fixed Income 06 – FI ETF Options
  • (discontinued) Equity Index 36 – Options on Xetra-Gold

Attachment:

  • Product Specific Supplement for Options on ETFs

Further information

Recipients:All Trading Participants of Eurex Deutschland and Vendors
Target groups:Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination
Contact:client.services@eurexchange.com
Related circular:Eurex circular 106/19
Web: www.eurexchange.com
Authorized by:Randolf Roth
 

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