International derivatives exchange Eurex is to introduce a new pricing model on 1 February 2011, as part of a strategy to encourage volumes, enhance order book quality and attract new customers, according to CEO Andreas Preuss.
Transaction fees will be lowered for a number of key index options, single equity options and single stock futures, for example, transaction fees for equity options will be reduced from €0.20 to €0.10 cents and fees in DAX options will be reduced from €0.75 to €0.50 cents.
Other measures under the new pricing model include the removal of the minimum quarterly transaction fee to lower entry barriers for new trading firms. The existing fee caps for block trades in options will be replaced by a staggered fee model, while proprietary traders will receive volume rebates that are valid for both order book and block trades. Additionally, in the first quarter of 2011 the contract sizes of selected single equity options and single stock futures will be increased to comply with international standards.
Members who provide significant trading volume will benefit from modified rebate schemes for both futures and options products. Additionally, the two current market making schemes will be further differentiated to reward market makers according to their market quality contributions.
On aggregate, Eurex says that participants will benefit from approximately €20 million in lower fees annually based on 2010 volume figures. Due to the expected growth in trading activity as a result of the new pricing model, Eurex estimates a largely neutral effect on sales revenues.
Eurex has already cut its clearing costs for cash equities, added Canadian single stock futures, and enhanced its pre-trade risk solution, in an effort to upgrade its capability and grow its market share in November 2010.