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What is the Eurex and Its Benefits

26 Jun 2023


The Eurex Exchange is one of the largest international exchanges in the world. Eurex is centered on trading in European-based derivatives. It has emerged as a cosmopolitan entity that allows investments into diverse segments, such as stocks, bonds, indexes, and so on. Headquartered in Eschborn, Germany, Eurex Exchange was established in 1998 by a merger of Deutsche Terminbörse (DTB) and the Swiss Options and Financial Futures Exchange (SOFFEX).

Eurex can be accessed from over 700 locales worldwide through electronic means. Its cutting-edge technological network allows for seamless contract settlements online. Eurex Clearing is responsible for clearing transactions on Eurex through its network of 200 members in 19 countries.

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What does the Eurex do?

The Eurex deals primarily with derivatives. Derivatives are financial instruments that derive their value from some underlying assets, such as stocks or commodities. The value of the derivative itself is decided by the rise and fall of the value of the underlying asset. Eurex allows trading in many derivatives, including equity derivatives, dividend derivatives, foreign exchange derivatives, property derivatives, etc.

Which assets are available for investment in Eurex?

Eurex allows for a wide range of trading instruments. First, it allows trading in equity derivatives. Equity derivatives can refer to single stock futures and options. It includes 800+ futures and 800+ options across 19 European nations. Apart from this, Eurex also has 12 Indexes to trade,  including EURO STOXX, DAX, and SMI. Apart from this, it allows investments in volatility derivatives.

Another product offering on Eurex is interest-rate derivatives. These financial instruments derive their value from an underlying interest rate or interest rate index. According to Eurex, it 'covers the entire Euro yield curve'. It allows for investment in futures and options contracts, such as the Euro-Schatz, Euro-Bobl, Euro-OAT, and Euro-Buxl, among others. It also offers derivatives based on Swiss-Franc interest rate products.

Eurex also facilitates investments in dividend derivatives, such as EURO STOXX 50® Index Dividend Futures and the DAX Index. These derivative contracts allow investors to speculate on future dividend payments of the underlying stocks.

Commodities such as energy, metal, or agriculture are also available as derivatives on Eurex.

The bouquet of services offered by Eurex thus offers fine exposure to European markets. This helps investors diversify their portfolios and manage risk.

What are the advantages of Eurex?

Eurex, with its powerful technology and offerings, has many advantages, such as:

  • High Liquidity: Eurex offers high liquidity to investors due to the presence of many participants.
  • Efficient Risk Management: Eurex has built-in safety control mechanisms with a reliability of up to 99.997 percent to cover risks. It is also bound by several regulatory measures.
  • Wide Range of Options: Eurex has a huge variety of asset classes to choose from. Such a wide range of offerings may prove to be helpful in mitigating risks in large portfolios.
  • Effective Technology: Eurex uses the best-in-class technology to guarantee the safety, security, and success of its investors.
  • Global Presence: Eurex has a worldwide reach. With players from around the world, it allows traders a chance to get exposure to varied market conditions and diversify their portfolios.
  • Educational Resources: Eurex offers educational resources to promote market research and support traders and investors.

Closing thoughts

Nowadays, investors are looking for a wide range of investment strategies to diversify their portfolios. It is here that entities like Eurex come to their rescue. With a diverse product offering centered around Europe, Eurex is a secure method of exposure to European stocks. With powerful technology built into its architecture, it is also an extremely safe and secure option.


Related Articles: What are American Options and European Options | 7 Best Bearish Options Trading Strategies

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