Also, recent fee reductions for Eurex's OTC transactions have made the Exchange's OTC services extremely price competitive. Equally Eurex introduced a new OTC functionality and generally enhanced its OTC service offering. Due to the added benefits Eurex's OTC Trade volume has shown spectacular growth reaching a record high of 99,383,966 contracts in May 2008.
Eurex is providing an extensive range of OTC Trade facilities to meet the asset managers needs:
Eurex's OTC Block Trade facility ('BTF') promotes maximum liquidity and trading flexibility for an asset manager, facilitating amongst others, portfolio overlay or GTAA strategies across European asset classes using Eurex products. The BTF allows market participants, to enter offexchange transactions in Eurex futures and options contracts and yet still have the transactions cleared by Eurex Clearing. The Exchange sets a minimum number of contracts for each specific product admitted to block-trading2. For example, Eurex Single Stock Futures and the new Dow Jones EURO STOXX 50® Index Dividend Futures have a minimum block trade limit of just one contract whereas Dow Jones EURO STOXX 50® Index Futures have a block trade limit of 1000 contracts. Option strategies or option volatility strategies using Eurex futures and options contracts can also use the BTF3.
The Eurex OTC Trade facilities are also very price competitive. Fee caps for block trades for equity options have recently been reduced by 50 percent to 75 percent and for Single Stock Futures by up to 83 percent.
Single Stock Futures
The Flexible Futures facility allows fund managers to customize their Eurex futures contracts in terms of:
Whereas the Flexible Options facility4 allows asset managers to customized Eurex options contracts in terms of:
The OTC EFPI and EFP functionalities5 allow for the simultaneous purchase (sale) of a Eurex equity index futures (EFPI) or Eurex fixed income futures (EFP) and sale (purchase) of qualifying cash equities or cash bonds whereas the EFS facility6 allows for the simultaneous purchase (sale) of a Eurex fixed income and sale (purchase) of a plain vanilla swap. To meet the needs of the asset management industry, the EFP and EFS Trade facilities were recently enhanced to include non-Eurex interest rate futures and duration weighted trades that is yield curve and barbell trades in the EFP functionality and interest rate swaptions in the EFS facility.
The asset manager is now able to trade, for example, Euro-Schatz versus Euro-Bund, a Euro- Bobl/Euro-Schatz/Euro-Bund barbell, EURIBOR Futures versus swaps and swaptions versus Euro- Bobl all off-exchange with the benefit of clearing the futures positions on exchange7.
The innovative Multilateral Trade Registration (MTR) facility allows the entry of block trades with one buyer or seller and several counterparties – instead of entering separate bilateral block trades. For equity options the block trade applies to all partial trades entered via the MTR facility – a significant cost saving to the asset manager. Also, the MTR facility alleviates the administrative burden of dealing in derivatives by reducing the number of transactions the portfolio manager has to record.
Trading via the Eurex OTC Trade functionalities means trading at low costs9 − recent fee reductions for OTC transactions have made the service extremely price competitive. Currently over 700 Eurex products are available for OTC trading. The Eurex OTC Trade facilities give the asset management industry the flexibility of trading in tailor-made off-exchange derivative products plus enabling them to enjoy the same benefits as on-exchange customers do: substantially reduced counterparty risk and standardized clearing and settlement processes. By entering their trades via the Eurex OTC Trade functionalities, asset managers have access to Eurex's state-of-art clearing services.
* For non EUR-denominated products, converted and rounded amounts in the perspective product currency apply