Competition up in US futures, but Eurex to struggle, says report

The entrance of Eurex to the US futures industry has improved the quality of the market, according to research company Celent.

“Even if the Eurex US market does not survive, its importance in the futures markets should not be undervalued,” said Jodi Burns, a Celent researcher and author of a new report called US Futures Markets: The Chicago Trifecta.

“Without the entrance of Eurex US, the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT) would not have been as motivated to meet the demands of their members, such as fungibility, and would not have changed their old business strategies,” he added.

Celent believes competition between the Chicago futures exchanges is not a fight over market share for certain products, but a “fight to remain viable in the overall market-place”. The report concludes that the established Chicago exchanges have successfully “changed the game” from one based on market share to one based on “ultimate survival and relevance in the wider futures market-place”.

Celent also believes, however, that Eurex US will fail to attract the necessary liquidity in Treasury trading to topple the CBOT from its market-dominant position.

“Eurex US’s single remaining weapon is the global clearing link it envisions between Eurex Clearing and the Clearing Corporation,” said Celent.