The CME will sublicense the S&P Euro Index and the S&P Europe 350 Index-along with its Financial, Information Technology and Telecommunications sectors-to trade on MEFF. Trades for all market participants will clear through the Chicago Mercantile Exchange Clearing House division. MEFF will join the CME Clearing House as a Special Clearing Member for these products. MEFF members will clear through MEFF as a special clearing member.
The agreement offers customers a margin offset between the European indices traded at MEFF and the flagship S&P 500 products traded on the Chicago Mercantile Exchange. The CME's S&P 500 and E-mini S&P 500 are the largest equity index futures contracts in the world. The longstanding and successful relationship between the CME and Standard & Poor's dates to the 1982 launch of S&P 500 futures on the CME.
CME members and their customers in the U.S. and overseas will be granted cross-exchange access to trade the index contracts on MEFF, with CME members gaining access to trade on the MEFF S/MART system. In addition, members of the GLOBEX® Alliance, which MEFF officially joined today in a signing ceremony, will have access to the contracts, along with other MEFF products.
The S&P Europe 350 Index measures the performance of equities in the United Kingdom and ten Euro-zone countries plus Denmark, Norway, Sweden and Switzerland. The S&P Euro Index is derived from the S&P Europe 350 and measures the performance of equities in ten markets of the Euro-zone. Both are free-float adjusted. Visit www.spglobal.com for more information as well as real-time and 12 years of historical data.
CME Chairman Scott Gordon said, "This agreement brings the strength of our long-standing relationship with Standard & Poor's to a new arena of significant growth. The customers of the CME and our newest international exchange partner, MEFF, will benefit from these new trading vehicles MEFF will develop that will clear at our world-class Clearing House."
MEFF Chairman, Josep M. Basañez said: "The European and American institutions and investors will greatly expand their opportunities to participate in the post-EMU European stock market with the futures and options on the S&P European Indices, traded on MEFF and cleared at the CME Clearing House. We have all the confidence that these new products will soon become the choice vehicles for the European and American Institutions, as they perfectly meet their needs and demands. We are very pleased to join our strengths in this venture with such world-class institutions as the Chicago Mercantile Exchange, our partner in the GLOBEX Alliance, and Standard & Poor´s."
Peter Jeffreys, Managing Director, Standard & Poor's Index Services (Europe), said "We are confident these contracts will give investors, both European and global, an additional layer of risk control; MEFF's association with the Chicago Mercantile Exchange will generate instant liquidity into the S&P Europe 350 and Euro indices, plus their sectoral derivatives, thus enabling investors, private and institutional alike, to gain immediate access to Europe's markets and sectors in a manner consistent with today's high demands for specific risk control. Building on the legacy of our world-famous S&P 500 Index, we believe the S&P Europe 350 and S&P Euro indices, and the futures contracts around them, will help establish the broader S&P Global 1200 Index, of which the Europe 350 is an integral part, as the world's most important and widely used index by the world's fund management industry."
The S&P Europe 350 Index and the S&P Euro Index capitalize on S&P's strengths in developing portfolio indices that provide regional sector representation, and serve as investable benchmarks. Since S&P indices feature highly liquid and investable securities, fund managers can easily replicate them.
The futures and options on futures contracts, to be developed by MEFF, will trade on the MEFF S/MART system, and the transactions will be transmitted electronically to the CME Clearing House. Start-up for trading in the S&P Europe 350 sectors is expected in the first quarter of next year and will be followed by the S&P Euro Index and S&P Europe 350 Index.
Other GLOBEX Alliance members are the CME, ParisBourseSBF SA, the Singapore Exchange Derivatives Trading (SGX-DT), the Bolsa de Mercadorias & Futuros (BM&F), and the Montreal Exchange (ME).
The S&P Europe 350 Index and its sectors will appeal to a variety of market participants, including: Investors who want to use regional portfolios as a proxy for the investable universe in the region; Fund managers with a strategy to replicate an index portfolio, who prefer a representative index without more stocks than necessary; Strategists following a sector/country mix allocation; Active investors looking for sector or regional indices with low turnover rates; and Equity Derivative Groups that use index futures to hedge the index portfolio risk.
MEFF trades futures and options on interest rates and stock indices and options on equities. The CME trades futures and options on interest rates, stock indices, foreign currencies and agricultural commodities. Standard & Poor's, a division of The McGraw-Hill Companies, provides independent financial information, analytical services, and credit ratings to the world's financial markets. Among the company's many products are the S&P Global 1200, the world's first real-time, investable global equity index, the S&P 500, the premier U.S. portfolio index, and credit ratings on more than 220,000 securities and funds worldwide. With more than 5,000 employees located in 21 countries, Standard & Poor's is an integral part of the global financial infrastructure.
