E-Derivatives Exchanges: Will Eurex Dominate the US Market?

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2 May 2001


Boston, MA, USA May 3, 2001

Derivatives Exchanges: Will Eurex Dominate the US Market?

Eurex is the exchange best positioned to take on the US derivatives exchanges who have resisted electronic trading, according to Celent

Unlike the US exchanges, leading European derivatives exchanges have wholeheartedly embraced electronic trading platforms. As these European electronic exchanges gradually invade the US derivatives market, mainly through alliances with major US derivatives exchanges, the pressure to close open outcry pits within the US market structure will increase. We believe that the electronification of all derivatives exchanges is inevitable.

The following derivatives exchanges are covered in this report:

  • Chicago Board of Trade
  • Chicago Board Options Exchange
  • Chicago Mercantile Exchange
  • Eurex
  • London International Financial Futures and Options Exchange
  • Marché à Terme d'Instruments Financiers

According to Sang Lee, the author of the report, "US-based derivatives exchanges, such as CBOT, CBOE and CME are risking their very existence by insisting on the continuation of open outcry trading pits. Increased competition from their European rivals will further increase the urgency for rapid adoption of electronic trading platforms in the next six to twelve months."

He goes on to add that, "When confronted with competition from Eurex arrogance and complacency led to the downfall of the open outcry pits of Liffe, once the largest derivatives exchange in Europe. US-based derivatives exchanges face a similar fate unless they act quickly to stave off challenges from their European rivals. Otherwise, European electronic exchanges, with Eurex as the leading candidate, will come to dominate the US market. While Eurex currently has alliances with some US exchanges preventing Eurex from full competition, we believe that the frustratingly slow progress of electronic trading will lead Eurex to abandon these partnerships and compete head-to-head with US exchanges."

The report provides a comprehensive analysis of each derivatives exchange, analyzing their business as well as their technology strategies.

A Table of Contents is available online.

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