Eurex invades Chi-town

The bustling trading pits of Chicago’s commodities exchanges can intimidate even the toughest traders -- but not Rudy Ferscha.

The CEO of German-Swiss derivatives exchange Eurex believes that his all-electronic model will quickly render those sharp elbows and piercing voices anachronistic when it opens for business in the Windy City in February.

“You don’t necessarily have to be six feet tall and weigh 200 pounds and elbow your way to the top step of a pit to have access to good prices,” says Ferscha, an Austrian whose tall, athletic frame would probably serve him well in the open outcry pits.

Eurex’s U.S. exchange will debut with 20-hour-a-day trading of U.S. and European interest rate derivatives. Initially, that will represent a big challenge to the Chicago Board of Trade and its flagship U.S. Treasury debt futures contracts. But further down the road, Ferscha says, Eurex also will offer trading of stock-index futures, posing a threat to the Chicago Mercantile Exchange and its popular Standard & Poor’s 500 index futures.

It’s far from certain that Eurex will take market share away from the Chicago markets, but members of both U.S. exchanges say they’re eager for the competition to begin: Eurex plans to charge lower prices and is regarded as having a more efficient trading system. “There is no market participant either here or elsewhere in the world who hasn’t seen the attractiveness of the electronic trading model,” says Ferscha.

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