Market for euro-denominated US equities to commence trading in September
European investor interest in foreign equities has prompted the launch of a new global market.
Deutsche BÃ¶rse has joined with Eurex, Clearstream International and Dow Jones to launch a global market for euro-denominated US equities, as well as exchange-traded funds and stock options on the Xetra and Eurex trading platforms. It is set to commence in September.
The partners also plan to create new index segments based on the Dow Jones Stoxx 50 for the Asia-Pacific region. Deutsche BÃ¶rse launched the global market concept due to a rise in demand for foreign equities and derivatives.
For example, in the past 10 years, interest in foreign equities by German retail investors has increased by 49% compared to domestic equity growth of 32%.
Similarly on the Dow Jones Euro Stoxx 50, future monthly average traded contracts of foreign derivatives increased by 74%, compared to an 18% rise in domestic derivatives on the Dax Future.
At Deutsche BÃ¶rse the number of US equities traded increased by 155% between 1999-2000.
The trades will be settled by Clearstream Banking via the existing link to the US central securities depository, Depository Trust and Clearing Corporation (DTCC).
The Xetra US Stars element of the new market will contain all stocks in the Dow Jones Industrial Average 30, S&P 100, Nasdaq 100 and Dow Jones Global Titans 50, bringing the total segment to approximately 200 equities.
The Eurex derivatives market is to initially list around 10 options on highly liquid US stocks including Cisco, IBM, Intel and Microsoft. At least three market makers per stock option will provide for the underlying liquidity.
Futures and options on the Dow Jones Global Titans 50 index, which contains the shares of 27 US companies, have already been trading in the Eurex equity index derivatives segment since the end of April.
Dow Jones Indices will incorporate the prices of US stocks traded on Xetra in the Dow Jones Industrial Average and Dow Jones Global Titans 50 index calculation. This means that when the new Xetra US Stars segment is launched the Dow Jones Industrial Average will already be calculated from 9am to 3.30pm before the US market opens.
The Dow Jones Global Titans 50 index calculation will also reflect the Xetra prices before trading opens in New York.
Goldman Sachs and Morgan Stanley have been appointed to make markets in US stocks and provide liquidity. In a similar capacity, Baader Wertpapierhandelsbank AG, Finacor Rabe AG and Wertpapierhandelsbank Seydler AG will be used for their experience in the German markets and as ledger brokers.
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