Netting of Sector Products Against Equity Options Results in up to 50 Percent Cost Savings Trading Volume in Sector Products Roughly Quadruples
Frankfurt, Germany - May 7, 2003 - Eurex, the international derivatives market, is continuing to expand its index derivatives segment with the introduction of 10 new sector products on the DJ Euro STOXX index. As of May 19th, 2003, Eurex will offer futures and options on the sectors Basic Resources, Chemicals, Construction, Cyclical Goods and Services, Food & Beverages, Industrial
Goods, Non-Cyclical and Retail. It will then have derivatives on all 18 sectors of this leading pan-European index. Moreover, as of the same date, Eurex is launching derivatives on the Insurance and Utilities sectors of the DJ STOXX SM 600. Up to now, futures and options have been tradable on the sectors Banks, Healthcare, Technology and Telecommunications of this broad Europe index.
Eurex CEO Rudolf Ferscha said, "The Eurex sector-index products are the fastest-growing products in the international derivatives business. The high potential of these products will also continue to be a contributing factor in the very high growth rates achieved at Eurex as the leading exchange in index derivatives."
Sector-index products are used by market participants as risk management instruments that serve to fine-tune the risk in their portfolios, and thus provide for maximum added value to Eurex customers. According to Eurex, the strong demand from market participants for sector-index products is based on the increasing application of trading strategies that are focused on individual
sectors; and a growing number of institutional investors have come to appreciate the advantages of sector derivatives, which have a much higher diversification potential. Besides, the number of sector products is rising in the cash market as well, with exchange-traded funds or index certificates, for example. This trend is also underscored by active OTC (over-the-counter) trading in sector products.
As previously reported, Eurex will also continue to raise the level of efficiency in the clearing of these products. Therefore, as of June 2nd, 2003, Eurex Clearing AG will net offsetting risks from positions in derivatives on equities and indices in the same sector in its margining procedure. This
bundling (so-called Cross Margining) reduces the margin requirements for Eurex customers, and thus the costs for the provision of collateral to secure transactions, by as much as 50 percent. The favorable trend in volume at Eurex in the trading of futures and options on the sector indices of the DJ Euro STOXX SM is continuing: During the first quarter of 2003, Eurex turned over some 1 million sector-index contracts, roughly quadrupling the volume posted in this segment compared with the first quarter of 2002 (226,000 contracts). The strongest product during this period was the option on the Banks sector with over 200,000 contracts traded.
Eurex media release
Walter Allwicher, Uwe Velten
Tel: + 49-69-21 01-1500