With the introduction of a central counterparty for Eurex Bonds, further participants will begin trading on Eurex-Bonds, among them BHF-Bank, Nord LB, Bayerische Hypo- und Vereinsbank, Bankgesellschaft Berlin and DG Bank. A total of nine participants are now trading on Eurex Bonds, which was launched in early October with five banks and the German Bundesbank. Eurex Bonds, the only platform in the world that integrates cash and derivatives trading in German federal bonds and also offers a straight-through processing option, expects to have 20 participants by the end of 2000.
The central counterparty, which is standard in derivatives trading, acts as the counterparty between all transactions by the participants and thus bears the risk in clearing and settlement for the buyers and the sellers, who have to put up margin collateral in return. At the same time, the central counterparty creates the desired anonymity that applies to trading for clearing and settlement as well.
Eurex has been operating the ECN "Eurex-Bonds," an over-the-counter market for integrated cash and derivatives trading in German federal bonds, since October 6 on a joint basis with international trading houses. Its partners are ABN Amro, Barclays, BBVA, BNP Paribas, Caboto, Credit Suisse First Boston, Commerzbank, Deutsche Bank, Dresdner Bank, Goldman Sachs, Morgan Stanley Dean Witter and West LB. The cooperation between Eurex and the market participants is taking place in the framework of a joint venture which operates and organizes the new market segment. The goal is to build up the most liquid electronic market for German and European federal bonds and implement the integration of cash and derivatives trading at the same time.
