MEFF, CME Sign Joint Trading And Clearing Agreement For S&P Euro And Euro Plus Indexes

MEFF, the Spanish Financial Derivatives Exchange, today signed an agreement with the Chicago Mercantile Exchange (CME) for jointly trading and clearing futures and options on the Standard & Poor´s (S&P) Euro and Euro Plus Indexes. The agreement will offer the benefit of concentrating the liquidity for these products in a single central order book, giving the members of both exchanges the advantages of trading the European indexes in Europe. The agreement provides that CME members will have the same direct access to the MEFF electronic trading book for these products that MEFF members enjoy. MEFF, which will become a special clearing member of the CME under the agreement, will clear transactions in the index products through the CME Clearing House on behalf of its members and their customers. MEFF members will still be able to clear the trades directly with MEFF. Merc clearing members will clear their transactions in the products through the CME. In addition to the CME and MEFF, members of France´s Paris Bourse SBFSA, Italy´s IDEM and Portugal´s BDP will be able to trade the new products through EuroGLOBEX?, which gives members of any of these exchanges direct electronic access to trade a number of contracts listed at the other exchanges. The exchanges announced their agreement today during the signing of a joint Memorandum of Understanding (MOU) by Scott Gordon and José Manuel Basañez, chairmen of the CME and of MEFF, respectively. The final agreement will be subject to approval by the U.S. and Spanish regulatory authorities. "Globalization and internationalization of the markets demand imaginative and sensible initiatives from us, if we are to meet the expectations of the market players" Basañez said. "The agreement between a leading world derivatives exchange like the CME and MEFF brings together the strengths of the two exchanges, offers a number of benefits to the participants without requiring special arrangements from them, and allows American institutions and investors to expand their opportunities to participate in the post-EMU European stock market while still preserving the essentially European nature of the contracts", he added. "The CME has been the market leader in equity index futures and options since we first traded the S&P 500 in 1982. Today's innovative agreement with MEFF provides for trading European indexes on a European exchange while offering the advantages of cross-exchange access and clearing through the CME's world-class Clearing House," Gordon said. "The demand for pan-European futures and options will continue to increase as the EMU unfolds, and the CME, MEFF and S&P are providing the ideal product, accessibility and financial safeguards to meet that demand. As investors increasingly view Europe as a unified market, the potential growth for pan-European products is phenomenal." "Standard and Poor's index products have enjoyed great success on the CME with the popularity of the S&P 500, the S&P MidCap 400, the S&P/BARRA Growth and Value indexes and, most recently, the E-mini S&P 500," said Robert Shakotko, Senior Vice President, Standard & Poor's. "Building upon this success, we expect the Euro and Euro Plus Indexes to be the first choice for investors in futures and options all over the world." The S&P Euro Index is a capitalization-weighted index of 160 stocks from 10 EMU countries-Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal and Spain. The S&P Euro Plus Index includes 200 securities from these countries, as well as Switzerland, Sweden, Denmark and Norway. The S&P Euro Index represented a capital pool of 1.76 trillion euros as of December 31, 1998; the S&P Euro Plus Index represented a capital pool of 2.26 trillion euros as of the same date. Trading of the futures and options on the indexes will take place from the start of the European trading session to the end of the U.S. trading session, with launch expected early next year, pending regulatory approval. Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (NYSE:MHP), provides financial, economic and investment information and analytical services to the global financial community. S&P maintains a wide variety of market indices, including the S&P Global 1200, the new global index covering all seven major regions of the world. The S&P Global Index includes the S&P 500 for the U.S., the S&P/TSE 60 for Canada, the S&P Euro and Euro Plus for Continental Europe and the S&P/TOPIX 150 for Japan, along with forthcoming indices for Asia/Pacific, Latin America and the United Kingdom. For information, visit www.spglobal.com. Founded in 1888, The McGraw-Hill Companies is a leading information services provider meeting worldwide needs in education, business, finance, the professions and government. The corporation employs 16,500 people located in more than 400 offices in 32 countries. Sales in 1998 were $3.7 billion.