30 Sep 2020

Eurex Exchange

Liquidity Provisioning: Amendment of Supplements to the Liquidity Provider Agreement and Reminder for Regulatory Market Makers

Eurex Circular 075/20


1.  Introduction

The Management Board of Eurex Deutschland and the Executive Board of Eurex Frankfurt AG have decided effective 1 November 2020:

  • to amend the General Supplement (GS) to the Liquidity Provider Agreement according to Attachment 1;
  • to amend the Product Specific Supplement (PSS) “Equity 01” for Equity Options and Selected Equity Index Options according to Attachment 2.

In addition, Regulatory Market Makers at Eurex Deutschland are reminded of their quotation obligations in accordance with Article 2 of the Commission Delegated Regulation (EU) 2017/578 (for reference please see Eurex circular 131/17). Violations against these obligations may be sanctioned by the Sanctions Committee of Eurex Deutschland.

2.  Required action

Liquidity Providers and Regulatory Market Makers should adapt their quotation behaviour accordingly.

3.  Details

A. Amendment of Supplements to the Liquidity Provider Agreement

The GS to the Liquidity Provider Agreement is amended as follows:

  • Inclusion of a formal statement in the Preamble that the GS and all PSS constitute “market making schemes” in the sense of MiFID II. 
  • Editorial changes in section 2.3.3 (4) to clarify that the example relates to quote widths.
  • Changes in quotation parameters for the Strategy Building Block in the appendix to reflect the expiration range extension in EURO STOXX® 50 Options (OESX) (see Eurex Circular 053/20).

The PSS “Equity 01” for Equity Options and Selected Equity Index Options is amended as follows:

  • Editorial change in section 4.1 to clarify that some spread requirements in equity index options are expressed in index points. There are no material changes in the quotation requirements. 

The Supplements to the Liquidity Provider Agreement shall be amended according to Attachments 1 and 2 to further substantiate the granting of incentives to the benefit of Liquidity Providers. The amendments will be deemed to have been approved if the Liquidity Provider does not lodge objections within fifteen (15) business days of notification of the amendment according to clause 2 (4) of the Liquidity Provider Agreement.

B. Obligations for Regulated Market Makers according to the Exchange Rules – Reminder

Since 3 January 2018, all Trading Members at Eurex Deutschland who pursue a Market Making strategy in at least one product on Eurex Deutschland must apply to become a Regulated Market Maker according to Article 1 of the Commission Delegated Regulation (EU) 2017/578. The obligations of Regulated Market Makers are incorporated in § 53 of the Exchange Rules of Eurex Deutschland. Violations against these obligations may be sanctioned by the Sanctions Committee of Eurex Deutschland.

Regulatory Market Makers in order book trading are reminded that they are required to continuously enter binding quotes in at least one product and during 50 percent of the daily trading hours on a monthly average. 

Market participants have access to a daily report (TD983 “Regulatory Market Making”) in order to check their performance and to monitor their compliance with the quotation requirements. The report is available on the Common Report Engine.

Attachments:

1 – General Supplement to the Liquidity Provider Agreement 
2 – Product Specific Supplement “Equity 01” for Equity Options and Selected Equity Index Options


Further information

Recipients:

All Trading Participants of Eurex Deutschland and Vendors

Target groups:

Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination

Contact:

Pricing & Market Making, marketmaking@eurex.com

Web:

Market-Making and Liquidity provisioning

Authorised by:

Randolf Roth


Market Status

XEUR

The market status window is an indication regarding the current technical availability of the trading system. It indicates whether news board messages regarding current technical issues of the trading system have been published or will be published shortly.

We strongly recommend not to take any decisions based on the indications in the market status window but to always check the production news board for comprehensive information on an incident.

An instant update of the Market Status requires an enabled up-to date Java™ version within the browser.