Eurex Exchange

Eurex Exchange is a foreign exchange for trading in derivatives based in Europe, offering a wide range of international benchmark products, operating one of the most liquid fixed income markets in the world, and providing open and low-cost electronic access to market participants.

Eurex Exchange is one of the highly recognized exchanges for derivative products across the globe. Its rich product basket, coupled with state-of-the-art trading technology and the electronic platform, has helped the exchange in its current recognition as it is today.

• Eurex Exchange is a European-based derivatives trading platform that provides a diverse selection of global benchmark products. It operates one of the most active fixed-income markets worldwide.
• Eurex, operated by Deutsche Börse AG, has three platforms: Eurex Exchanges, Eurex Clearing, and Eurex Repo. Eurex Exchange is a leading player in European futures and options, with over 400 institutions from 32 countries trading 1.6 billion contracts annually.
• Eurex is a top exchange for derivatives, known for its effective liquidity pools and innovative technology since 1998.

Eurex Exchange has a broad range of diversified products, from Swiss and German debt instruments to European stocks and various stock indices. The portfolio covers various asset classes and an extensive range of products, including some of the world's most heavily traded derivatives contracts. The Eurex Exchange trading hours range from 7:30 to 22:00 CET.

Exchange’s product basket comprises nine asset classes or benchmark products such as:

1. Interest Rate Derivatives
2. Equity Derivatives
3. Equity Index Derivatives
4. Dividend Derivatives
5. Volatility Derivatives
6. Exchange-Traded Funds Derivatives
7. FX Derivatives
8. Commodity Derivatives
9. Property Derivatives

Eurex Clearing acts as the clearinghouse for all transactions executed on Eurex Exchange and operates as a central counterparty for multi-asset class clearing of the mentioned exchange-traded product range and over-the-counter traded products.

Eurex Exchange has been a pioneer in fully electronic trading, replacing traditional forms, such as open outcry, helping buyers and sellers transact from distant places. The open outcry trading system existed at various places across the UK and the US when Eurex was brought into existence. It brought together the participants through an electronic trading platform and network.

Deutsche Börse Group developed T7 bringing advanced electronic trading in derivatives to the forefront. The exchange's platform is popular as the T7 trading architecture, launched in 2013. This reliable and robust trading system bridges upwards of 7,700 traders in around 35 countries, translating into the trade of more than 7 million contracts daily.

Eurex Exchange is the largest player in the European futures and options market. It witnesses a trading volume of over 1.6 billion contracts a year. The exchange deals with market participants connected from 700 locations worldwide. Their global distribution network connects more than 400 institutions from 32 countries, with more than 8,000 admitted traders.

It is one of the ventures of Eurex, which public company that Deutsche Börse AG wholly controls. Eurex operates three platforms:

1. The Eurex Exchanges,
2. Eurex Clearing, and
3. Eurex Repo.

Since its inception in 1998, Eurex has continually set its name in electronic trading and clearing and is providing highly efficient liquidity pools, helping it succeed in the market.

The Deutsche Terminbörse GmbH (DTB GmbH) was founded in 1988 and is based in Frankfurt. The DTB started trading on January 26, 1990. They started with trading options; initially, later futures were introduced.

In the 1990s, Europe saw a lot of changes in its financial sector. London Financial Futures Exchange (LIFFE) started losing dominance to the Deutsche Terminbörse (DTB) in trading German government bonds futures (The Bund).

DTB GmbH was integrated into the newly founded Deutsche Börse AG in 1993.

The DTB, being one of the pioneers in electronic exchanges, had spread its architecture across Europe and into the US. Since the DTB was in a tussle with its rival LIFFE to consolidate market share, it began considering merging with the Swiss Options and Financial Futures Exchange (SOFFEX).

In 1998, Deutsche Terminbörse GmbH merged with SOFFEX to form today’s Eurex .

Initially, the Deutsche Börse and the SIX Swiss Exchange jointly owned Eurex, with the DTB holding 50% of the voting rights and 85% of the share capital. Until January 2012, the joint partnership lasted, after which Deutsche Börse purchased the balance shares in Eurex from SIX Group, giving Deutsche Börse exclusivity over the derivatives exchange.

Eurex has nine representative offices across the globe.

It follows rules that regulate the organization of the options and futures exchange approved under German law.

The exchange has laid down rules and regulations concerning the following:

The Eurex Exchange offers a range of benefits to traders. Some of them have been listed below:

Market Integrity

• Integrity: Objectivity to the markets, a transparent and binding regulatory structure, and supervision through the overseeing authorities is important, mainly in the volatile market.
  Keeping regulatory watch on the trading activities of market participants enhances with the help of electronic trading. The transparency of processing in real-time improves the supervision for both exchanges and their participants.
• Discovery of Fair Price: Their liquid products and diverse trading participants ensure transparent, competitive, and fair pricing. Whenever market participants place their orders and quotes in the order books, those orders are matched against one another, helping in price discovery throughout the trading day.

Market Efficiency

• Unmatched market efficiency: Market participants enjoy efficient access to liquidity, a robust global distribution network, and unparalleled system performance, giving them direct access to a reliable world of performance, speed, and proximity.
• Efficient access to liquidity: Their fully automated markets provide the participants with swift access to a diverse option of international products, with proven resilience and high liquidity, mainly in volatile markets. Designated Market Makers support new product launches to ensure liquidity from the start of trading. They have Market Makers in all of their option markets.
• System performance: The exchange anticipates developments in technology that might happen in the future by continually upgrading the T7-system to improve speed and performance while trading. They have continuously upgraded system capacity, enhanced information distribution on a real-time basis, and improved interfaces to ensure smooth trading.

This has been a guide to what is Eurex exchange. Here we explain its rules along with its history and the benefits that it offers traders in the market. You may learn more about financing from the following articles –

• Derivatives Market
• Derivatives Contracts
• Auction Market
• Top 6 Most Popular International Option Exchanges