Future of Eurex US under review

Future of Eurex US under review

Swiss German derivatives exchange Eurex is reviewing the performance of its struggling US unit over the next month amid speculation that it plans to shut down the Chicago-based futures operation.

Launched in February 2004, the unit has struggled to compete against the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME) and has failed to capture a significant share of the market.

The exchange has declined to comment on a report by German newspaper Handelsblatt that Eurex US is likely to be closed in its present form. But a Eurex spokesman has told Reuters reporters that the exchange will be reviewing the unit's prospects over the next month or so, adding that the process should be complete in September.

This latest speculation follows rumours last month that Eurex was considering setting performance targets for unit after the division lost $48.2 million last year.

The US exchange was initially launched in a bid to challenge Chicago's dominance in trading of US Treasury futures but Eurex has failed to make inroads. In May 2005, treasury volume on Eurex US was rumoured to be less than one per cent of that in comparable CBOT contracts. The exchange has now decided to focus its efforts on currency futures, starting in September.

Eurex has an antitrust complaint pending against Cbot and CME, which alleges that the two exchanges are still trying to illegally block its entry into the US market.

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