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Under the terms of the agreement, the popular MOS program, which has enabled around the clock trading of CME's and SGX's leading interest rate products, will be extended through Feb. 4, 2007. The agreement contains provisions for automatic yearly renewals thereafter unless either exchange elects to terminate.
The original MOS agreement signed in 1984 was the first - and remains the oldest and most actively used - international agreement between two derivatives exchanges. Under MOS, positions in selected contracts initiated at CME can be transferred and closed out - or offset - at SGX, and vice versa. MOS significantly expanded the length of the trading day and continues to provide market users with greater choice and access to market liquidity.
The innovative MOS program contributed to the success of CME's flagship Eurodollar contract, which is also successfully traded at SGX. Since MOS was established, the Eurodollar has grown to become one of the most actively traded futures contracts in the world. Last year, just over 202 million Eurodollar futures contracts traded at CME and 19.5 million traded at SGX. Year to date for 2003, over 176 million Eurodollar futures have traded at CME and over 17 million at SGX.
"We are very pleased to once again extend our innovative business agreement with SGX," said CME Chairman Terry Duffy. "SGX has long been a valued business partner of CME, and we look forward to further working with them as part of CME's expanding global strategy."
Craig S. Donohue, who will become CME's CEO on Jan. 1, 2004, said, "The flexibility in trading and clearing that MOS created nearly 20 years ago has long provided international banks, money managers and other financial institutions with a critical tool for using our products throughout an increasingly global business day. CME Eurodollar trading volumes increased from a mere 324,000 contracts annually before MOS to more than 200 million last year, making it the world's most liquid and actively traded futures contract."
SGX CEO, Hsieh Fu Hua, said, "We are pleased to strengthen our ties with CME and look forward to building the MOS into an even more successful link. Having added our Euroyen and Euroyen Libor futures in the past few years, we will work with CME to include more Asian derivatives in the MOS."
Eurodollars are U.S. dollars on deposit in banks outside of the United States. They have been a benchmark interest rate in corporate funding for decades. CME's Eurodollar futures contracts, traded since 1981, represent an interest rate on a three-month deposit of 1 million U.S. dollars. Eurodollar contracts are also available for electronic trading via CME's GLOBEX® electronic trading platform 23 hours each business day.
