Eurex, the international derivatives exchange jointly owned by Deutsche Börse and SIX Swiss Exchange, intends to grow its regional membership and further develop partnerships with Asian exchanges, says Roland Schwinn, executive director and head of sales, Asia and Middle East.
An acceleration in Eurex's Asian business is reflected in a 30% growth in 2010 from the previous year in the total number of contracts traded by Asian members. Eurex's overall volume in 2010 amounted to approximately 1.9 billion contracts, as compared to 1.7 billion in 2009.
Eurex has total membership of around 410, of which 19 are Asian members, including four in Singapore, five in Taiwan, four in Hong Kong, two in Australia and four in Dubai.
Schwinn expects Eurex's Asian membership to grow not only in terms of numbers, but also in terms of the markets covered. “Mainland China will be one of our most important markets for the coming years. Currently, no foreign derivatives trading is allowed in China. In Hong Kong, there are six mainland brokers who have a licence to operate out of Hong Kong and one of them, Guangfa Securities, has become a Eurex member. Due to the attractiveness of the euro and the strong German economy, we are seeing more local and international brokers and banks in Asia, including more Indian firms, requesting access to Eurex,” Schwinn says.
In September 2010, Eurex admitted the first five exchange members from Taiwan to its international distribution network. The five Taiwanese members are Concord Futures Corp., KGI Futures Co., Polaris MF Global Futures Co., SinoPac Futures Corp., and Ta Chong Futures Co.
Educational initiatives also rank high on Eurex's agenda. In July 2010, Eurex started a ”Trader Training Program' for professional traders in Taiwan as part of its ”Training & Education Initiative Asia'. Significant parts of the training courses have focused on the functioning of the European financial markets and the efficient use of exchange-traded derivatives.
Another major portion of Eurex's Asia-related activities has been in developing contracts linked to Asian stock indexes. Since October last year, Eurex participants have been able to get exposure to the Indian market through Eurex Sensex futures and options. Sensex is the benchmark index of the Bombay Stock Exchange in which Deutsche Börse has a 5% stake.
“India has a very developed trading culture already. India is looking at many Asian countries for more investment opportunities out of Asia and Indian firms are also looking at the global economy, developments and one important factor for the attractiveness of our products is the German economy at the moment,” Schwinn notes.
On 30 August 2010, Eurex introduced the Eurex Kospi product, which is set up and traded in the Eurex system as an option, therefore mirroring the contract specifications of Kospi 200 Options on the Korea Exchange (KRX). It is legally a futures contract that expires daily into a Kospi 200 Option position at KRX prior to the market opening at KRX.
“We're close to 9,000 contracts average daily volume for the Eurex Kospi product,” Schwinn adds.
Eurex also entered into a partnership with the Singapore Exchange (SGX) last July to launch the SGX EURO STOXX 50 Index futures and options on futures for the first time in Asia. SGX and Eurex are jointly marketing the US-dollar based contracts as part of the collaboration efforts between the two exchanges.
“The most important factor of all when we go into cooperation with other exchanges is that we have to create value for the entire market. We constantly speak with almost all Asian exchanges and are constantly on the lookout for opportunities on how we can cooperate. What we can bring in for the Kospi, for example, is a very large distribution network of around 410 exchange members globally, and also we could also offer a very reliable trading platform for after- hours trading in Korea,” asserts Schwinn.
The introduction of the Eurex Kospi product will enable international investors and traders to participate in the KOSPI 200 options market during core trading hours in Europe and North America, when the KRX market is closed.
“In Asia, there are a lot of spreads trading firm who are interested in trading markets against each other. So we particularly encourage those spreads trading firm to trade the SGX EURO STOXX future denominated in US dollar and our EUREX EURO STOXX future denominated in Euro,” Schwinn adds.