Eurex Enhances Its Market Structure
The international derivatives marketplace Eurex, part of Deutsche Börse Group, enhances its market structure to address industry trends and further meet its member’s needs. In Q4, Europe’s largest derivatives exchange will launch an electronic price discovery platform that allows bank’s broker desks and inter dealer brokers to contact market makers with request for quotes in order to find a counterpart to a trading interest. Initially, the service will be available for fixed-income and money market derivatives, but other asset classes will be added soon.
Orders are automatically transmitted to Eurex’ T7 Entry Service (TES) for exchange-trade confirmation and post-trade processing. The service captures all data throughout the negotiation and makes it available to the member in order to support with the Best Execution requirements under MiFID II.
The enhancement is a strategic move for Eurex. “Market participants increasingly rely on transparent and efficient market places – not only for their listed business, but also for their former OTC activities,” said Randolf Roth, member of the Eurex Executive Board. “We continue to innovate and adopt our market structure to the evolving needs of the financial industry and the real economy.”
Historically, market participants agreed on large or complex orders bilaterally via phone or online chat, and then entered these orders manually into Eurex’ Trade Entry Service. However, there is a growing demand for fully automated and efficient solutions by market participants. Eurex addresses these needs by applying its core competences in process efficiencies to the OTC market. The fully regulated exchange facilitates not only price discovery but also ensures an automated transfer into its exchange and clearing infrastructure. This creates new efficiencies and minimalizes operational risks resulting from transmission errors.
The new offering also supports market participants in their efforts to comply with MiFID II. The impending legislation will strengthen the emphasis on transparency and best execution as well as stricter rules on transaction reporting, research and trading. In this context, MiFID II will affect brokers to meet stricter rules on data collection and proof of best execution.
In October 2017, turnover at Eurex reached 115.8 million contracts – a slight increase compared with October 2016 with 114.5 million contracts.
Fixed income managers need to show more evidence of best execution.
The exchange will be able to submit transaction reports for clients to all relevant regulators.
Trading venues need to make pre- and post-trade information available under the new rules.
The Swedish technology provider has made an acquisition and raised funds for growth.
Message specifications have been enhanced for MiFID II.