Eurex has opened its European derivatives markets to U.S. Introducing Brokers (IB) so they can become direct exchange members, following recent changes to CFTC rules.
In July, the U.S. Commodity Futures Trading Commission approved final rules amending Part 48 of its regulations which effectively allows CFTC-registered foreign boards of trade (FBOTs) to give U.S. IBs registered with the CFTC direct access to their electronic trading systems.
“Greater efficiency in terms of trading and risk management”
IBs generally act as intermediaries between clients and brokers. So far, U.S. market participants utilizing Introducing Brokers to trade on Eurex had been limited to non-U.S.-based Introducing Brokers, many of whom were not available after markets closed in Europe.
Robbert Booij, CEO of Eurex, commented: “Providing clients with easy access to our markets is a top priority for us. This latest move offers U.S. market participants greater choice and will provide them with greater efficiency in terms of trading and risk management.”
Access to EURO STOXX 50, STOXX Europe 600, MSCI derivatives
The new regulation and Eurex’s new offer will enable U.S. clients to continue to execute via U.S. Introducing Brokers for the full U.S. trading day.
The expansion of the US brokerage ecosystem for Eurex will open up trading opportunities for US traders as a wide range of European and global benchmark derivatives can be traded on Eurex till the end of the U.S. trading day, including EURO STOXX 50, STOXX Europe 600, German Bond Futures, and several MSCI derivatives.
Eurex is one of the world’s largest derivatives exchanges, primarily focused on futures and options trading. It is part of the Deutsche Börse Group and operates electronically, providing access to traders from over 700 locations globally.
The exchange specializes in European-based derivatives but offers a variety of products such as interest rate derivatives, equity derivatives, dividend derivatives, foreign exchange derivatives, and commodity derivatives. Eurex also supports European bonds, stocks, and stock indexes, giving traders a broad range of financial instruments to trade.
Additionally, Eurex provides clearing and settlement services through Eurex Clearing, which ensures the smooth processing of contracts and reduces counterparty risk. Its advanced T7 trading platform supports real-time data access and efficient trade execution, used across multiple stock exchanges in Europe.
Eurex wants to be the leading FX liquidity hub in Europe
A few months ago, Santander Asset Management Europe started expanding their FX futures business to Eurex, supported by Banco Santander as Clearing Member and Deutsche Bank as liquidity provider.
The latest move by the Spanish asset manager underlines the trend towards listed FX business as more and more market participants are utilizing listed FX derivatives as a tool to hedge their portfolio performance.
Amid rising costs stemming from counterparty risk and related regulations, centrally cleared FX futures and options help market participants to mitigate counterparty credit risk, navigate uncleared margin rules (UMR) and optimize capital costs.
According to the announcement, Santander also plans to establish an FX options business at Eurex after already trading its first FX options block trade ever at Eurex, supported by Deutsche Bank.
Eurex has processed over 1.7 million contracts in 2023, nearly three times compared to 2020 when a total of 600k contracts have been traded. In Q1 2024, the number of traded contracts reached 586,000, up by 16% YoY.
