Eurex US, the fledgeling Chicago-based arm of the Swiss-German derivatives exchange, has won approval from UK regulator the FSA to operate as an overseas investment exchange.
The FSA's recognition is considered critical to Eurex's chances of building liquidity for its new marketplace, which has struggled to make headway against incumbent operators.
With the green light from the FSA, UK traders will be able to participate in the US marketplace directly from their screens in London. UK finance houses currently generate more than half the trading volumes on the main Eurex exchange.
In a statement, the FSA says approval was granted after the Treasury took advice from the director general of Fair Trading, who concluded that "the rules of Eurex US do not appear likely to restrict, distort or prevent competition to any significant extent".
Eurex is still waiting to hear from US regulators about its application to create a direct clearing link between Frankfurt and the Clearing Corp. of Chicago. Earlier this week, the Chicago Board of Trade raised objections to the link on the grounds that US investor funds could be put at risk in the event of a bankruptcy at the Exchange.