Eurex wins cross-border clearing mandate as rule-makers agree closer ties

Eurex wins cross-border clearing mandate as rule-makers agree closer ties

The prospect of a truly global futures and options market has moved a step closer with an agreement between US and European regulators for closer co-operation on cross-border issues and CFTC approval of a critical transatlantic clearing link for Swiss-German derivatives exchange Eurex.

The Commodity Futures Trading Commission (CFTC) gave the green light to clearing in the US by futures commission merchants and the The Clearing Corporation of sixteen types of commodity futures and option contracts traded on the Eurex Deutschland exchange, located in Frankfurt, Germany.

Approving the link, acting CFTC chairman Sharon Brown-Hruska described the plan as a "significant and innovative endeavor".

"The clearing link will foster the development of global markets and bring economic benefits to customers," she says.

Through the link, US traders dealing on Eurex in Germany and domestically will be able to consolidate their positions and collateral in a single clearing account, thereby easing the costs of trade.

At the same time, the CFTC and the Committee of European Securities Regulators (CESR) announced a new initiative develop a practical "action plan" on cross border issues. The regulators say they intend to explore areas of convergence and common interest and share views on regulatory issues of common operational concern with the aim of developing a more detailed action plan that will be released in the first quarter of 2005.

Brown-Hruska comments: "Although the CFTC and CESR members have a fifteen-year record of successful supervisory cooperation and innovative arrangements, the dynamic changes affecting our global markets compel us to build, not rest, on our past successes."

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