Eurex and BOTCC finalise agreement on US exchange

European derivatives exchange Eurex has finalised the terms of a clearing agreement with the Board of Trade Clearing Corporation (BOTCC), opening the way for the launch of a new US exchange next year.

Under the terms of the agreement, the BOTCC becomes Eurex’s 'partner of choice' to clear trades on its new US-based exchange, which is slated to launch in early 2004. Eurex also takes a 15% stake in the BOTCC. This will come in conjunction with a formal name change of the BOTCC to ‘The Clearing Corporation’.

Eurex said the partnership will give customers of The Clearing Corporation direct access to Eurex’s European products. Eurex customers, meanwhile, will be able to clear the exchange’s US products, once introduced, via both Eurex Clearing and The Clearing Corporation.

“For the first time customers will be able to leverage their existing infrastructures to access both US dollar and euro-denominated products through the global clearing partnership,” said Eurex in a statement. “As a result customers will save up to 95% of their current margin requirements, substantially increasing the efficiency of capital employed.”

Eurex said the cost savings will be achieved by enhanced cross-margining and reduced collateral through the use of collateral pools for a wider range of products. Eurex added that customers will be able to open positions in the European market and close them in the US market and vice versa.

Eurex announced it was in talks with the BOTCC in May.