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Eurex to offer exchange-traded credit derivatives

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GLOBAL - Eurex plans to launch what it says will be the world's first exchange-traded credit derivatives contract on 27 March.

Deutsche Börse executive board member Andreas Preuss said it would be a future based on the iTraxx Europe five-year index series.

Speaking in London, Preuss added that next month Eurex would introduce volume-based rebates for proprietary trading to further support high frequency trading activities, such as algorithmic trading.

"As a consequence, proprietary trading clients will be able to trade and clear additional contract volumes at a fee that is up to 30% lower than at present," he said. "At the same time, with the implementation of the Eurex Technology Roadmap, we will be offering higher data throughput rates and significantly faster system response times to our customers."

He continued: "In combination with upgrades in the Eurex hardware, this will enable the trading platform to process transaction volumes of more than 1bn quotes a day."

Preuss went on to say that London had developed into Deutsche Börse's largest cash and derivatives marketplace. "In 2006 order volume from Xetra participants in the UK amounted to 42% of total turnover.

"At Eurex, the role of UK participants is even more pronounced: In 2006, as much as 48% of turnover based on contracts traded originated in the UK," he said. "Part of the UK volume will be due to orders originally generated in the US and routed to Eurex or Xetra via the subsidiaries of US banks and brokers in London. However, this further underlines the significance of the London market for Deutsche Börse."

Preuss said Eurex's international customer base was growing. "Last year we added Singapore to the Eurex network [and] this year Dubai will follow," he noted. "Traders there will be offered a direct high-performance connection to the exchange via new access points. We are thus expanding our global reach and participating in the liquidity pools building up in Asia and the Middle East."

Expansion in Asia was also on the agenda for Clearstream, he noted. "Two months ago it became the first ICSD to settle Japanese government bonds outside Japan. Next month it will inaugurate new offices in Singapore and Tokyo to complement Clearstream's offices in Hong Kong and Dubai."

Preuss added that Clearstream had been the first ICSD to accept the rouble as a full settlement currency.

"For Deutsche Börse, the year 2007 and beyond will be devoted to a strategy of organic growth, which is open to co-operation with other market operators in all conceivable formats," he said. "The number of IPOs in Germany is on the rise again. This is a very good sign, not only for our company, especially for small and medium-sized companies seeking to finance their growth through the stock market. The German legislator is laying the foundations for REITs as a new asset class."

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