Eurex, the European derivatives exchange owned and operated by Deutsche Borse, is to launch a government bond trading platform next month. The venture, to be called Eurex Bonds, will be 70% owned by Eurex. The remaining 30% will be split between a group of 10 international investment banks.
Eurex Bonds will enable so-called basis trades, in which offsetting cash and derivatives transactions are concluded simultaneously. Moreover, straight cash-market transactions will also be possible on this platform.
"The goal is to build up a highly liquid electronic market for German federal bonds and implement the integration of cash and derivatives trading at the same time," states the exchange in a statement.
Germany's Bundesbank has already committed to trade on the new system.