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Eurex EnLight: targeting a new segment

Release date: 14 Jun 2018 | Eurex Exchange, Eurex Clearing

Eurex EnLight: targeting a new segment

Taking into account clients’ needs, we are extending the product range of Eurex EnLight into the equity derivatives space.

Extension ahead: from 19 June 2018, our selective request-for-quote (RFQ) platform Eurex EnLight is going to cover equity and equity index derivatives. Specifically, the off-book trading service for listed derivatives is going to broaden its product scope to include equity options and equity index options on Swiss underlyings in addition to fixed income derivatives. We launched Eurex EnLight in December 2017 to allow market participants to selectively engage with counterparties to find liquidity and arrange exchange trades off-book.

Client consultations revealed that there is demand for EnLight to also cover equity and equity index derivatives. Derivatives on Swiss underlying will be the first segment in this regard. To ensure a smooth process, a simulation preceded the extension. For three days, market participants representing half of the Swiss market segment extensively tested the service and concluded several simulation deals on Eurex EnLight. In the near future, we will continue to extend the product range of EnLight into the equity derivatives space according to clients’ needs. “We’re targeting one segment at a time,” Randolf Roth, Member of the Executive Board at Eurex, explains.

EnLight has been designed against the background of MiFID II. “While the regulatory agenda seeks to drive business to the lit markets, there will always be special needs when executing large orders without impacting the market,“ says Roth. “That is why we at Eurex spent a lot of our innovative power to create new market models under the framework that meet both the regulator‘s demand for transparency and the industry‘s need for discrete execution of large orders.”

Bringing together Market Makers and Brokers to efficiently execute large client orders, Eurex EnLight supports best execution, one of the key requirements of investor protection of the MiFID II regulation. At the same time, our platform facilitates the audit trail as clients can easily track requests and responses as well as trade arrangements.

Several market participants already use the service, and the activities of Market Makers who receive requests are strong. However, mindsets and processes – for example of formerly handling requests via phone or chat – do not change in a day, as Randolf Roth acknowledges: “We are well aware that it takes time for a completely new model to become established.” Clients confirm that EnLight is the right way but that they need to adjust their procedures. “Our platform makes the process of finding a trading counterparty more transparent, and it simplifies requests and audit trails,” Randolf Roth says. “And though it might take some time I strongly believe that these advantages will win through so that clients can benefit from efficient trade arrangements compliant with regulation.”

Any member interested to be added to the whitelist of potential responders for RFQs in Swiss equity derivatives is invited to contact Eurex via e-mail at EnLight_Improve@deutsche-boerse.com, indicating respective Trader IDs and product groups they want to be added for.