German exchanges offer US equity products

Deutsche Borse and Eurex, owned by Deutsche Borse and the Swiss Exchange, have launched a tranche of new US stocks and futures to be traded in Europe. The initiative is designed to enable members to trade 10 euro-denominated stock options on US equities, as well as 200 US stocks and two index funds. Settlement of the trades will be carried out by Clearstream, a leading European clearing and settlement organisation.

The development will allow trading of US derivative products in the same way as German blue-chip derivatives are traded at present. There will be at least three market makers per stock option for Eurex-traded futures, which will help to provide liquidity. A Deutsche Borse spokesperson claimed investors should benefit from market-maker support, as it should increase liquidity, which in turn should reduce spreads.

Although trading for cash and futures products will take place on different exchanges, settlement will be carried out on a single platform through Clearstream. The consolidated settlement activity, is planned to provide both risk and cost reduction for investors.

This new US segment of products is the first step in Deutsche Borse's 'Global Market Concept', an initiative to trade a range of international securities on the exchange. Its next step will be to offer major Dutch securities and derivatives in the fourth quarter. Deutsche Borse and Eurex are looking at offering a range of Asia-Pacific products in the future.