What is the EUREX Exchange?

Published by Thomas Herold in Investments, Trading

'EUREX Exchange' is explained in detail and with examples in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

EUREX is a state of the art options and futures exchange which Deutsche Borse of Germany jointly operated with SWX the Swiss Exchange until 2012. At this point, Deutsche Borse acquired the remaining shares of the EUREX exchange from SWX. The exchange operates offices in nine global locations including in Frankfurt, London, Chicago, Zurich, and Paris.

This international exchange specializes in providing trading on derivatives based in Europe. As such, it turns out to be the biggest European options and futures market. Products across nine asset classes trade on the exchange. These range from Swiss and German debt instruments to individual stock and stock indexes of European companies and exchanges.

EUREX clearing handles the clearing of every transaction carried out on the exchange. In this way, it serves as a multi asset class clearing central counterparty for the considerable product range. It also clears products that trade over the counter.

The exchange itself has become enormous. The Futures Industry Association said in its 2015 annual survey that the EUREX exchange holds the position of third biggest derivatives exchange based on the volume of contracts it trades. Its headquarters is located in Eschborn, Germany near Frankfurt, the financial capital of Germany. The operators of the exchange are the EUREX Frankfurt AG and EUREX Zürich AG. Both publicly traded companies are now entirely owned by Deutsche Börse, the German stock exchange operator.

The EUREX Exchange offered something almost unique when it began functioning in 1998. In both the United States and Great Britain, open outcry trading still dominated markets. EUREX came along as among the first exchanges in the world to provide a trading platform which was completely electronic instead of the more traditional pit or open outcry trading so prevalent at that time. Using this method of trading, buyers and sellers perform transactions via remote locations that are connected by the electronic network and trading platform.

The exchange launched its present day platform the T7 trading architecture in 2013. This system advanced the electronic trading of derivatives significantly. Deutsche Börse Group developed it. Using this dependable system, over 7,700 different traders operating in more than 35 countries are connected so that they can trade in excess of seven million contracts each market day.

The EUREX Exchange won several major impressive awards for 2016. Global Capital presented it with the “European Exchange of the Year” honor for the second year in a row. It received this nod for its broad range of products that hedge risk throughout nine alternative and traditional asset classes, as well as for its impressive offerings of equity index products and volatility derivatives. Financial News also honored EUREX with the 2016 Best Derivatives Trading Platform. This is also its second consecutive year to win this award.

EUREX gradually enabled Deutsche Börse to wrest control of the Bund German bonds futures trading away from London. Up till the late 1990s, the London Financial Futures Exchange dominated trading in this segment. This back and forth struggle for control of this important market became known as the “Battle of the Bund.”

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The term 'EUREX Exchange' is included in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.