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Eurex Resets Countdown to FX Derivatives Launch

Eurex is planning to launch its first range of exchange-traded currency derivatives on 7 July, after resolving issues connecting to CLS which thwarted its attempt to introduce the contracts last year.

The move introduces a new asset class to the Deutsche Börse-owned venue and will be the second major FX launch on a European exchange this year.

If successful, the exchange will offer futures and options on the main European currency pairs: EUR/USD, EUR/GBP, EUR/CHF, GBP/USD, GBP/CHF and USD/CHF.

“With this step we are making a further important contribution to increasing the transparency and safety of financial markets,” says Mehtap Dinc, member of the Eurex executive board and responsible for product development.

“We have tailored our products to market practices and want to provide efficient and effective access to our marketplace.”

The new launch date follows the launch of 30 currency-pair futures on CME’s new European venue last month.

CME Europe’s launch also experienced delays, in this case as a result of the Bank of England’s concerns about the proposed settlement model for FX futures which differed from standard OTC convention.

In contrast Eurex is already an established futures and options exchange, but its planned launch into FX was postponed in October due to its third-party service provider bank requiring additional time to “further strengthen the control framework” to access CLS.

The venue is notably launching with exchange-traded FX options, a set of instruments which are currently actively traded on other venues including CME.

CME Europe is also understood to be planning the launch of FX options on its futures contracts before the end of the year.

According to Eurex, its contracts “combine best practice OTC market conventions with the transparency and minimised counterparty risk of exchange-traded, centrally cleared derivatives.”

Eurex Clearing will offer physical settlement of contracts for these products through CLS.
It also has a licensing agreement in place to launch Moscow Exhange’s USD/RUB and EUR/RUB currency pairs in the coming months.

The venue says is also planning to extend its FX offering to all G10 currency pairs over time.
All the FX contracts will consist of a uniform size of 100,000 and will offer minimum price movement of a half pip “for precision trading” and minimisation of transaction costs, according to Eurex.

“Our FX offering will have a unique differentiation to other offerings,” says Thomas Book, CEO of Eurex Clearing.

“Eurex Clearing as central counterparty of all trades will remain the counterparty until the final settlement of trades, providing full safety for both sides of the transaction.”

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