Last year Eurex, the Frankfurt-based derivatives exchange formerly known as DTB, emerged as the world's top derivatives exchanges by volume of business, overtaking long-time leader America's CBOT. A few years ago, such a change would have prompted an increased sense of competition between the American and European exchanges. But not now. Eurex has an alliance with CBOT, just as Eurex's main European rival, Liffe, has an agreement with CME. Challenged by new technology and the difficulty of maintaining customer loyalty in face of new market players, Europe and America's leading derivatives exchanges have acknowledged the need to pull together. Indeed Eurex is seeking more alliances in 2000.
This is a turbulent period for exchanges in which apparent winners and losers can swap places surprisingly quickly. Liffe seemed to be in terminal decline when it lost market share in the key European government bond future to Frankfurt in 1998. But it quickly changed its membership structure, its trading systems and even leaped ahead in technology with its electronic trading platform LiffeConnect now being distributed in the US through its partnership with the CME. The CME also has been redefining itself since early 1999 with a strategic plan that is leading it along the road to demutualization.