Eurex Exchange

Updated on May 2, 2024
Article byHarsh Katara
Edited bySusmita Pathak
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Eurex Exchange?

Eurex Exchange is a foreign exchange for trading in derivatives based in Europe, offering a wide range of international benchmark products, operating one of the most liquid fixed income markets in the world, and providing open and low-cost electronic access to market participants.

Eurex Exchange

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Eurex Exchange is one of the highly recognized exchanges for derivative products across the globe. Its rich product basket, coupled with state-of-the-art trading technology and the electronic platform, has helped the exchange in its current recognition as it is today.

Key Takeaways

  • Eurex Exchange is a European-based derivatives trading platform that provides a diverse selection of global benchmark products. It operates one of the most active fixed-income markets worldwide.
  • Eurex, operated by Deutsche Börse AG, has three platforms: Eurex Exchanges, Eurex Clearing, and Eurex Repo. Eurex Exchange is a leading player in European futures and options, with over 400 institutions from 32 countries trading 1.6 billion contracts annually.
  • Eurex is a top exchange for derivatives, known for its effective liquidity pools and innovative technology since 1998.

Eurex Exchange Explained

Eurex Exchange has a broad range of diversified products, from Swiss and German debt instrumentsDebt InstrumentsDebt instruments provide finance for the company's growth, investments, and future planning and agree to repay the same within the stipulated time. Long-term instruments include debentures, bonds, GDRs from foreign investors. Short-term instruments include working capital loans, short-term loans.read more to European stocks and various stock indices. The portfolio covers various asset classes and an extensive range of products, including some of the world’s most heavily traded derivatives contracts. The Eurex Exchange trading hours range from 7:30 to 22:00 CET.

Exchange’s product basket comprises nine asset classes or benchmark products such as:

  1. Interest Rate DerivativesInterest Rate DerivativesInterest rate derivatives are the financial instruments that track the fluctuations of the underlying interest rates. These underlying interest-bearing assets can be a single interest rate or a bunch of different interest rates.read more
  2. Equity DerivativesEquity DerivativesEquity Derivative is a class of derivatives whose value is connected to the price variations of the underlying asset & it is generally used for hedging risk or speculating moves in indexes. It has 4 major types, i.e., Forwards & Futures, Options, Warrants, & Swaps. read more
  3. Equity Index Derivatives
  4. Dividend Derivatives
  5. Volatility Derivatives
  6. Exchange-Traded Funds Derivatives
  7. FX Derivatives
  8. Commodity DerivativesCommodity DerivativesCommodity derivatives refer to those financial instruments that use the price or price volatility of the underlying commodities as the base for change in their price to amplify, hedge, or invert, in a way that the investors can track these underlying assets' performance. It includes commodity futures and commodity swaps.read more
  9. Property Derivatives

Eurex Clearing acts as the clearinghouse for all transactions executed on Eurex Exchange and operates as a central counterparty for multi-asset class clearing of the mentioned exchange-traded product range and over-the-counter traded products.

Eurex Exchange has been a pioneer in fully electronic trading, replacing traditional forms, such as open outcryOpen OutcryAn open outcry is a trading approach generally employed on a pit for stock, option, & futures exchanges. It entails the usage of oral & gestural signs by traders to convey trading details, intentions, & acceptance.read more, helping buyers and sellers transact from distant places. The open outcry trading system existed at various places across the UK and the US when Eurex was brought into existence. It brought together the participants through an electronic trading platform and network.

Basic and Advanced Derivatives Course

–>> p.s. – If you want to hone your knowledge of Derivatives, then you may consider our ​​“Basics and Advanced Derivatives Bundle Course”​​ (12+ hours of video tutorials). This course covers all the crucial topics to improve your knowledge and understanding of basics to advance derivatives along with awareness as to how derivative instruments work and benefit you.

Deutsche Börse Group developed T7 bringing advanced electronic trading in derivativesDerivativesDerivatives in finance are financial instruments that derive their value from the value of the underlying asset. The underlying asset can be bonds, stocks, currency, commodities, etc. The four types of derivatives are - Option contracts, Future derivatives contracts, Swaps, Forward derivative contracts. read more to the forefront. The exchange’s platform is popular as the T7 trading architecture, launched in 2013. This reliable and robust trading system bridges upwards of 7,700 traders in around 35 countries, translating into the trade of more than 7 million contracts daily.

History

Eurex Exchange is the largest player in the European futures and options market. It witnesses a trading volumeTrading VolumeThe volume of trade is the overall measure of the number of securities, shares or contracts traded during a particular trading day. read more of over 1.6 billion contracts a year. The exchange deals with market participants connected from 700 locations worldwide. Their global distribution network connects more than 400 institutions from 32 countries, with more than 8,000 admitted traders.

It is one of the ventures of Eurex, which public company that Deutsche Börse AG wholly controls. Eurex operates three platforms:

  1. The Eurex Exchanges,
  2. Eurex Clearing, and
  3. Eurex Repo.
Eurex Exchange Platforms

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Since its inception in 1998, Eurex has continually set its name in electronic trading and clearing and is providing highly efficient liquidity pools, helping it succeed in the market.

The Deutsche Terminbörse GmbH (DTB GmbH) was founded in 1988 and is based in Frankfurt. The DTB started trading on January 26, 1990. They started with trading options; initially, later futures were introduced.

In the 1990s, Europe saw a lot of changes in its financial sector. London Financial Futures Exchange (LIFFE) started losing dominance to the Deutsche Terminbörse (DTB) in trading German government bonds futuresBonds FuturesBond Futures is a contract that puts liability on the holder to purchase and sell a fixed amount of bonds as specified in the contract agreement at a price which is predetermined by the contract holder where the other side is the exchange. It can be bought and sold in the exchange market, the price and dates are standardized at the time when an agreement is entered into by the holder.read more (The Bund).

DTB GmbH was integrated into the newly founded Deutsche Börse AG in 1993.

The DTB, being one of the pioneers in electronic exchanges, had spread its architecture across Europe and into the US. Since the DTB was in a tussle with its rival LIFFE to consolidate market share, it began considering merging with the Swiss Options and Financial Futures Exchange (SOFFEX).

In 1998, Deutsche Terminbörse GmbH merged with SOFFEX to form today’s Eurex .

Initially, the Deutsche Börse and the SIX Swiss Exchange jointly owned Eurex, with the DTB holding 50% of the voting rights and 85% of the share capital. Until January 2012, the joint partnership lasted, after which Deutsche Börse purchased the balance shares in Eurex from SIX Group, giving Deutsche Börse exclusivity over the derivatives exchange.

Eurex has nine representative offices across the globe.

Rules

It follows rules that regulate the organization of the options and futures exchange approved under German law.

The exchange has laid down rules and regulations concerning the following:

Eurex Exchange Rules

Benefits

The Eurex Exchange offers a range of benefits to traders. Some of them have been listed below:

Market Integrity

Market Efficiency

Frequently Asked Questions (FAQs)

What time does the Eurex Exchange clear?

The trading day at Eurex Exchange typically lasts from 07:30 until 22:00 CET. There are three stages to it: pre-trading, trading, and post-trading.

What time zone is Eurex Exchange?

Eurex Germany Timezone. CEST. GMT+02:00 is the current time zone. CEST is the acronym for this time zone. Frankfurt is presently observing Daylight Saving Time (DST). The following time change will occur on Sunday, October 29, 2023, at 3:00 a.m., five months from now.

Where is Eurex Exchange?

The Exchange is run by the public firms Eurex Frankfurt AG and Eurex Zürich AG, which are entirely owned by the German stock exchange operator Deutsche Börse AG. The Exchange’s headquarters are in Eschborn, Germany, close to Frankfurt am Main.

How does EUREX Exchange contribute to global financial markets?

EUREX Exchange plays a significant role in global financial markets by offering a platform for hedging, risk management, and speculation using a wide range of derivative products

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