The impact of the introduction of the Euro on the structure and the trade volume of the European derivatives exchanges

The article analyzes and summarizes several considerations the impact the i ntroduction of the euro had on derivatives exchanges in Europe. It further outlines perspectives of potential developments. The author has divided the analysis into three parts according to the main types of exchange-traded c ontracts: short- and long-term interest-rates and index derivatives. The ef fects on the underlying assets, changes in territorial structure, and volum es of trade between January 1997 and October 1999 are discussed in each par t. The main findings suggest that trade volumes are centering on the only unde rlying asset for any type of derivatives. The benchmark for short-term inte rest-rate derivatives became Euribor; for long-term interest-rate derivativ es it was the German Bund; and among euro-indexes are dominant Stoxx indice s. Moreover, the trade in Euribor derivatives is largely concentrated in Lo ndon (Liffe); however, Bund derivatives are mostly traded in Frankfurt (Eur ex).