Global money manager Man Group plc announced on July 27, that is has bought a 70% majority stake in the United States Futures Exchange (USFE), the official name of Eurex’s U.S. subsidiary, Eurex US. Man paid $23.2 million for the stake.
Kevin Davis, chairman and CEO of Man Financial, says the move was made to further develop derivatives products and to create products for hedge fund and the retail market space. “Hedge funds are constantly searching for new trading opportunities,” Davis says.
Andreas Preuss, CEO of Eurex, says the deal will allow USFE to offer products that were not previously offered in an exchange environment. Specifically, Preuss says the relabeled USFE will offer OTC type products that previously have traded in a bilateral environment and offer them on an exchange with central counterparty clearing.
Eurex had been looking for a partner for Eurex US since last year when it grew apparent that regulatory hurdles would prevent them from rolling out their entire global clearing arrangement.
The trading platform for the USFE will continue to operate and will offer new products for buy-side customers such as hedge funds and retail investors. They are targeting the first quarter of 2007 to launch new products.
Davis says no decision has been made on the existing currency futures and interest rate products, which will be reevaluated over the next few months, but USFE appears to be going in a different direction. Preuss says their model will target creating innovative new products as opposed to the past model of attempting to migrate volume from one exchange to another.
Man is looking for additional investors from the hedge fund and financial services sector and expects their stake in USFE to drop below 50% once new investors are on board.
