360 degrees - Eurex Exchange’s Equity Derivatives segment

Cornelius Müller: Eurex has a great offer, combining not just the whole of Europe’s single names, including the most liquid indexes, but also the related Dividend Futures (single names & indexes). It is a holistic approach, which we are certain is very important for market participants, who want to trade all national markets through one single exchange connection.

Additionally, we also provide Brazilian and U.S. Single Stock Futures. As mentioned by Markus, the overall offer in this segment now comprises more than 1700 single name products and we are quick to add new products and ranges at the request of our diverse international customer base.

Besides our broad offering, we also have a very competitive fee structure. For example, for transactions of client accounts we charge 10 cents per lot for an option on a French company. Especially for liquidity providers we offer special schemes that can reduce those fees further, by up to 80%. Together with our tight spreads, this is very interesting for funds as we are the only exchange truly offering the best execution, taking into account both factors.

For asset managers, it is also crucial to trade all national markets at Eurex in a “single-market outset”. In contrast to most other venues, at Eurex clients can benefit from margin offsets either between the different single names across the countries or between an equity index instrument and instruments on their individual components. This provides collateral efficiencies and therefore reduces overall costs.

Markus-Alexander Flesch: With our initiative to increase our Weekly Equity Options offering, we launched 43 additional Weekly Equity Options in October 2015, now covering all EURO STOXX 50® Index components bringing up the total number to 57. They show a positive development already, trading 120,000 contracts in Q4 2015, with open interest reaching a peak of 37,745 contracts in September 2015. By definition, the “Weeklies” are a special type of option product, and were designed and created for all EURO STOXX 50® Index components. Its recent success has proved that Eurex was again able to deliver the appropriate and innovative products to clients requesting products “away from the ordinary”.
Just at the end of 2015 we have also taken a major step, regarding the opening of our market to the U.S.: Joining the “SEC class non-action relief” allows brokers and dealers to familiarize end clients with our Equity Derivatives. This will increase the visibility of our product range in the U.S. and create more activity on our markets, hereby further increasing liquidity. Considering our holistic offer for all country segments, Eurex is the perfect gateway for any U.S. based customer who wants to easily trade the whole of Europe.

In the Italian equity derivatives segment we have about 25 percent market share. Here we will also focus on a strong retail base.

In Spain we have about 30 percent market share. In conjunction with our dedicated expansion into the Spanish government market, via our new 10-year Euro-BONO Futures, I am convinced we will gain further ground on the Iberian Peninsula.

We could also observe, especially in the countries we have gained more market share, that additional volume is increasingly derived from order book transactions. Here we have already been a strong contender, thanks to the great support of our liquidity providers. This trading pattern is especially visible in the first two expiration months, where we saw that most of the volume traded goes through the order book.

The market fragmentation we observe across Europe, with market shares distributed over six markets, is, from my perspective, hindering a development as we have seen for the equity option market in the U.S. But the market share development for several countries showed already the trend to move towards Eurex, as we offer the only integrated European market.

In the panel where I was present on “the year of growth for European Equity Options?“ everyone agreed that the European Equity Options market is still lagging relative to the U.S. market. The market fragmentation is by a lack of transparency for customers amongst the reasons. On a positive note, the Weekly Equity Options, listed on Eurex, were cited as one of the best innovations of 2015 and we all expect a lot from the added offer on ETF options.

The Netherlands, with its expertise on Market-Making is a vital marketplace for Eurex Exchange though there is fierce competition between three venues. Notwithstanding this, we recently captured 18.5 percent of the overall volume, clearly indicating that we are on the right path there.