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Derivatives

Eurex Sets Sights On U.S. Options Trading By 2003

Eurex, the world's largest and most liquid derivatives exchange, is looking to create an options exchange in the U.S. Executives and board members at several floor-based U.S. options exchanges said Eurex has aggressive plans to create such an exchange by fall of 2003, either through acquisition, partnership or a platform built from scratch. "They have the resources, the commitment and the desire," said a board member of the Chicago Board Options Exchange who is familiar with Eurexs plans. Speculation last week pointed to the Pacific Exchange as a possible acquisition target for Eurex, a move that many agreed would be a cheaper entree into the U.S. than the creation of an exchange from scratch.

Uwe Velten, a Eurex spokesman in Frankfurt, Germany, acknowledged that Eurex is expanding its business and looking to trade U.S. products. However, he said, for now Eurex will "continue consultations with customers in the U.S. to determine the best way to offer them trading of U.S. products." He added: "If a partnership [with a U.S. exchange] would help achieve these goals then we would enter into one. But we do not want to contribute to any speculation."

Some options industry insiders believe it would make sense for Eurex to establish a partnership with an existing U.S. exchange. Insiders at the Pacific Exchange said they had no knowledge of any discussions with Eurex but did not rule out the possibility. Dale Carlson, a spokesman for the exchange, said "I will neither confirm nor deny any talks that may or may not be taking place with other markets." With seat prices at options exchanges facing all-time lows, observers speculate that it would be easy for a foreign exchange to make a quick move.

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