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The Chicago Exchanges vs Eurex US



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Code : ITF0010

Year :
2004

Industry :Banking, Insurance and Financial Services

Region : :USA

Teaching Note:Not Available

Structured Assignment : Not Available

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CBOT- pre 13 Dec 1996 Founded in the pre-computer age of 1848, the CBOT had proved market watchers wrong by continuing to dominate financialmarkets even in the computer age. It continues to be a leading futures and options on futures exchange.More than 3,600 CBOT members trade 50 different futures and options products at the exchange through open auction and/or electronically. Volume at the exchange in 2003 was a record-breaking 454million contracts It was atCBOT that futures contracts came to be popularized. The earliest “forward” contract, the precursor of futures contract, for 3,000 bushels of cornwas recorded in 1851. In its early history, theCBOT traded only agricultural commodities such as corn, wheat, oats and soybeans...

Eurex OnDecember 13th 1996, a letter of Intentwas signed betweenDeutscheBörse AGand SWX Swiss Exchange to create a joint trading and clearing platform10.Deutsche BörseGroup is aGermanmarket-place organizer for trades in shares and other securities. Its product and services portfolio covers the entire process chain: fromsecurities and derivatives trading through the settlement of transactions and provision ofmarket information right up to the development and operation of electronic trading systems. It has customers in Europe, the US and Asiawho are serviced bymore than 3,200 employees...

Battles for the U.S. market On January 15th 2004, Eurex, in partnershipwith 17US financial institutions, launched its subsidiary Eurex US. Initially CBOT and other Chicago exchanges tried to convince the regulators to deny Eurex’s operation by invoking patriotic feelings and vilifying Eurex. For instance, the ChicagoMercantile Exchange Chairman TerrenceA.Duffy thundered about “abusive trading practices, allegedly permitted in Germany,” thatmust not be allowed to “impair the fair operation of our regulated U.S.market.”...

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Carey and Bernard’s call to arms Formore than 150 years, the primarymethod of trading at theCBOT was open auction,which involved tradersmeeting face-to-face in trading pits to buy and sell futures contracts. Rivalmarkets around the world,most of thempurely electronic exchanges, have been nabbingmore andmore business fromChicago. The combined globalmarket share of the CBOT and the CME slipped to a troubling 21%in 2002 from 30%in 1998 and 46%back in 198920. So to regain themarket share and also tomeet the needs of a growing global economy, in a better way, theCBOT successfully launched its first electronic trading systemin 1994....




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