After CME, Eurex Potpones FX Futures Launch

by Trefis Team
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After the CME Group (NASDAQ:CME) postponed the launch of its London-based futures exchange in the last week of September, another major player, Eurex, has backed-down from the market for the time being. Eurex, the derivatives arm of Deutsche Borse, announced in a letter to its clients recently, that it has postponed the launch of its FX futures and options market indefinitely. The delay was caused because the control systems of third-party bank with which Eurex partnered are not ready yet. [1]

We believe that this is good news for the CME Group. At the time CME postponed its launch, we feared that other players would enter the market before it, and exploit the first mover’s advantage. However, Deutsche Borse’s delay suggests that other players are also facing some problems in launching new European futures products.

At the same time, the delay seen at two of the world’s leading exchanges can be seen as a concern that the European derivatives market may not be an easy nut to crack.

See our full analysis for the CME Group

CME Group Had To Postpone Its Launch Twice

CME Group was initially scheduled to launch its London-based futures exchange on September 9. It planned to initially start with the launch of 30 FX currency futures and then expand into other products gradually. However, it had to postpone the launch twice – first to September 29 due to regulatory reasons, and then indefinitely due to a “technical issue”. (Read: CME Postpones Its London-Based Futures Exchange Again)

While the delays may just be the initial fumbles that can happen when something new is attempted, now that Eurex is also having problems in launching the same products, it might be a sign that entering this market may not be as easy as was perceived initially. If so, there is a chance that several new players that eventually plan to enter this market and capture a piece of the growing European derivatives market may be deterred. See our earlier article to get a sense of the number of players that look to capture a piece of this market: Major Exchanges Look To Seize The European Derivatives Market Opportunity

For now, we continue to forecast rapid growth in the European derivatives revenue of major players such as NYSE Euronext and the CME Group. We will continue to monitor the developments in this market closely and update our projections accordingly.

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Notes:
  1. Eurex forced to delay forex derivatives launch, FT, October 7, 2013 []
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