Structured products: News

Deutsche Boerse and the SWX Group are to combine their warrant and certificate trading activities in a jointly operated securities exchange organisation, they announced last week.

The objective is no less than a European exchange for warrants and certificates.

The collaborative undertaking will be via a co-owned holding company domiciled in Zurich, Switzerland, which will operate the nationally-recognised exchanges of both Switzerland and Germany. It builds on existing cooperative efforts between Deutsche Boerse and the SWX, including the Eurex options and futures exchange, as well as STOXX, the European provider of security market indices.

The new company, to which both partners will contribute their existing business in securitised derivatives, will operate the securitised derivatives exchanges in both countries. SWX will spin off its business in warrants and certificates into a new Swiss-based exchange, which is scheduled to commence operations at the beginning of next year. The holding company will also form an exchange in Germany under the mantel of the Bremen Stock Exchange, which SWX acquired last year. This latter exchange should hopefully begin operations in Q4 next year.

Technologically, trading on these exchanges will initially be conducted on separate trading systems, and then be transferred by the end of 2009 to a common electronic platform. The Swiss-based exchange will remain under the sovereignty of Switzerland, while trading in Germany will be conducted under German supervision and with two different market models. Issuers in Germany will have the choice of having their securities admitted to trading on either a fully-automated basis or by means of a specialist.

The two exchanges said they expected to commence activities in early 2007.