The Clearing Corporation will change its structure to include two significant changes: Current shareholders of The Clearing Corporation will hold 85 percent of The Clearing Corporation and Eurex 15 percent. The capital base of The Clearing Corporation will be 100 million USD, 85 million USD contributed by current shareholders and 15 million USD contributed by Eurex. Eurex will also have one seat on the Board of Directors. The existing shareholders will elect the remaining eight board members.
Secondly, the guarantee function currently performed through the company capital will be performed through a separate clearing fund. Therefore, customers of The Clearing Corporation will no longer need to hold a stake in the company in order to clear at The Clearing Corporation, greatly increasing their flexibility. The Clearing Corporation will offer a share buy back program in order to allow shareholders to monetarize a certain amount of their equity interest while continuing to use The Clearing Corporation's clearing services. The Clearing Corporation will formally change its name from Board of Trade Clearing Corporation to The Clearing Corporation.
The arrangement between The Clearing Corporation and Eurex is non-exclusive and The Clearing Corporation will continue to develop business arrangements with other exchanges and derivatives marketplaces. Eurex and The Clearing Corporation will make joint decisions concerning core areas of the partnership such as cross margining additional products with Eurex U.S. products. The initial term of the arrangement is seven years with subsequent automatic three year renewals.
The global clearing partnership will give customers of The Clearing Corporation direct access to Eurex's European products. At the same time Eurex customers worldwide will be able to clear Eurex's U.S. products, as introduced, via both Eurex Clearing as well as The Clearing Corporation. For the first time customers will be able to leverage their existing infrastructures to access both U.S. Dollar- and Euro- denominated products through the global clearing partnership. As a result customers will save up to 95 percent of their current margin requirements, substantially increasing the efficiency of capital employed. This will be achieved by enhanced cross margining and reduced collateral through the use of collateral pools for a wider range of products. Customers will benefit from full fungibility, allowing them to open positions in the European market and close them in the U.S market and vice versa.
"The new structure of the Clearing Corporation will position our company for growth and additional opportunity. Our partnership with Eurex opens a new era in global derivatives trading ? and a totally new era for The Clearing Corporation as an independent user owned company," said Michael Dawley, Chairman of the Board of Governors of The Clearing Corporation. "Members of The Clearing Corporation and their customers will participate in a new, all-electronic, global marketplace that will offer the lowest cost and highest value in the business.
Eurex CEO Rudolf Ferscha said: "The Clearing Corporation and Eurex will create great value for customers and accelerate growth throughout the industry. This agreement forms an unprecedented industry partnership and marks a significant milestone in our plans to launch a U.S. exchange in early 2004. Through this partnership Eurex teams up with the leading industry participants in the U.S market to provide the best services for the industry worldwide."
"Our partnership with Eurex allows The Clearing Corporation to maintain its independence and history of innovation in the derivatives business while ensuring that Chicago remains a center of futures trading activity," said Dennis A. Dutterer, President and CEO of The Clearing Corporation.
About The Clearing Corporation (www.clearingcorp.com): The Board of Trade Clearing Corporation is a Delaware corporation now in its 78th year of business. The company is owned by 87 clearing member stockholders, who represent the world-wide derivatives marketplace participants and market makers, and is the only active independent futures clearinghouse in the world. The Clearing Corporation is the largest clearing organization for futures in the U.S and clears over 98 percent of all U.S capital market derivatives. The Clearing Corporation offers clearing services for multiple exchanges and market places.
About Eurex (www.eurexchange.com): Eurex is the world's leading futures and options market for derivative instruments and the largest derivatives clearing organization in the world. Total clearing volume on Eurex exceeded 801 million contracts in 2002. It provides access to a broad range of international benchmark products: Eurex operates the world's most liquid fixed income markets, with 450 million contracts traded in the 2, 5 and 10 year euro interest rates. At the same time, Eurex is the leading exchange in European index products with a market share of over 70 percent. Furthermore, in the equity options business Eurex has traded contracts with an underlying value of 583 billion Euro in 2002, making it the largest equity options market worldwide. Eurex has developed and currently operates the successful a/c/e trading platform which trades more than 80 percent of all U.S. bond futures. a/c/e and Eurex utilize the same trading platform and the global Eurex network and Eurex will continue to use this infrastructure for the new exchange.
