Navigating the financial markets is no easy feat as they have a wide range of norms, rules and regulations that govern them. Moreover, they are volatile and reactive, making investing and trading hard work. Knowledge of the markets, the security one is interested in and the industry within which it operates can help ease one’s perception of and experience with financial markets.
Operating within these markets are exchanges where a wide range of goods and services are exchanged keeping in mind the forces of demand, supply and price. This article seeks to shed light on all that one such exchange entails i.e., the Eurexor the Eurex Exchange.
Understanding What the Eurex Is
Recognized as one of the biggest futures and options markets in the world, the Eurex Exchange has as its key interest European-based derivatives. That being said it can be electronically accessed by traders situated in more than 700 locales spread across the world.
Located close to Frankfurt, Germany, Eurex falls under the Eurex Group and is held and owned by Deutsche Börse AG. This company provides exchange and transaction services that allow investors and financial institutions to gain access to global capital markets.
A Deeper Examination of the Eurex
While the main focus of the Eurex remains to be derivatives, the Eurex range still features products including European stocks, stock indexes and bonds.
Apart from allowing trading to commence under varied derivatives instruments, Eurex also allows users to partake in clearing and contract settlements. In terms of figures, Eurex is responsible for settling over 1.6 million such contracts on an annual basis. Today its entirely electronic network is widely recognized as one of the most superior and innovative electronic networks in the world. Eurex Clearing is responsible for clearing contracts and transactions that are settled on this exchange. It is responsible for serving approximately 200 members situated in 19 countries.
Exploring the History of the Eurex
Founded in 1988, Eurex originally involved a joint partnership involving Deutsche Börse AG along with the SIX Swiss Exchange. At the time, the original open outcry system that had prevailed up until then was transitioning towards entirely electronic trading platforms. Set against this backdrop the Eurex became one of the first exchanges to provide its users with entirely electronic trading offerings.
2012 saw Deutsche Börse AG gain sole ownership of the Eurex trading platform as it purchased each of the shares held by the SIX Swiss Exchange.
Derivatives trading reigns supreme on the Eurex. Here, derivatives refer to financial instruments that aren’t representational of ownership of the underlying assets. That being said they rise or fall in value in sync with the market price of the assets under consideration. Recognized as investments under the option to buy or sell a certain number of shares keeping in mind a future date.
Those that seek to use the Eurex exchange can take advantage of a wide range of such products. They include the following.
- Interest rate derivatives
- Property derivatives
- Dividend derivatives
- Commodity derivatives
- Foreign exchange derivatives.
Eurex Trading Technology Employed
When looking at the technology employed by Eurex, its trading platform makes use of a technology called T7. This technology was the brainchild of the Deutsche Börse Group. In addition to Eurex’s trading platform, it is employed by the European Energy Exchange (or the EEX) as well as by Powernext to allow for derivatives trading to be carried out. The Frankfurt Stock Exchange (or FRA) employs the T7 system such that cash trading can be carried out. The Vienna Stock Exchange (or WBAG) and the Irish Stock Exchange (or ISE) also employ the T7 system for cash trading.
Management Responsible Under Eurex
Key management personnel responsible for Eurex as of 2021 include the following.
Thomas Book was replaced by Michael Peters who serves as the CEO of Eurex Frankfurt AG in July 2020. Since 2006 the Executive Board of the Eurex Frankfurt Exchange has featured Michael Peters as a member. He has been a vice-chair of the same since February 2016. In addition to this role, he is also part of the Management Board of Eurex Deutschland.
As of 2013 Erik Tim Müler, the CEO of Eurex Clearing AG has played a role under Eurex Clearing’s executive team. Prior to taking on this role, he served as a managing director for the Deutsche Börse Group. This previous role saw him being responsible for corporate strategy in addition to mergers and acquisitions.
Those that choose to use the services offered by Eurex, gain access to the entire electronic, integrated trading and clearing platform that is geared towards futures and options.