Swiss/German derivatives exchange Eurex has confirmed plans to begin trading foreign exchange futures, aggressively encroaching on territory staked out by the Chicago Mercantile Exchange.
Contracts will initially be listed on six major USD currency pairs (Euro, Australian dollar, British pound, Yen, Swiss franc, Canadian dollar) and four cross currency pairs (EuroYen, SterlingYen, EuroSwiss, EuroSterling), beginning 23 September.
Eurex's entry into the market is a direct threat to the CME, which has seen volumes on currency futures soar in recent months, boosted by the intervention of big hedge funds.
The arrival of Eurex could mark the start of a sustained price-cutting war, as the Swiss/German derivatives exchange says it will waive all trading fees for FX contracts for all market participants for the duration of 2005.
Rudolf Ferscha, CEO of Eurex, says: "Listing FX contracts on Eurex US will offer the global marketplace the opportunity to trade FX on a liquid and transparent market with a highly effective distribution network."
Contracts traded on Eurex US will be cleared by The Clearing Corporation using the Concero clearing services platform.
The move marks an attempt by Eurex to rescue its ailing US business, which was initially launched in an effort to challenge Chicago's dominance in trading of US Treasury futures. Speaking to reporters, Eurex US chief executive Satish Nandapurkar blamed unfair competition for the exchange's failure to make inroads. "The window of opportunity in Treasuries has passed," he remarked, signalling the Exchange's retreat from Treasury products.