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Eurex US and NFA sign Regulatory Services Agreement Chicago 05 November 2003

Eurex US and NFA sign Regulatory Services Agreement Chicago 05 November 2003. Rudolf Ferscha Peter Reitz CEO, Eurex Member of the Executive Board, Eurex. NFA to provide Surveillance Services to Eurex US.

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Eurex US and NFA sign Regulatory Services Agreement Chicago 05 November 2003

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  1. Eurex US and NFA signRegulatory Services AgreementChicago05 November 2003 Rudolf Ferscha Peter Reitz CEO, EurexMember of the Executive Board, Eurex

  2. NFA to provide Surveillance Services to Eurex US • Eurex US and the National Futures Association (NFA) have finalized and signed a regulatory services contract • Eurex to obtain regulatory services from leading U.S. provider • Initial term of the contract is 3 years with automatic one year renewals • NFA is Eurex US‘s preferred choice to ensure that • customers are protected • market conditions are fair and orderly at all times

  3. About National Futures Association • Mission is to provide innovative regulatory programs and services that ensure futures industry integrity, protect market participants and help its Members meet their regulatory responsibilities. • Members of NFA include all US FCMs, Introducing Brokers, Commidity Trading Advisers and others • Unique Self-Regulatory U.S. Registered Association of U.S. futures professionals • Commenced operations in 1982 as a non-profit,self-regulatory organization for the derivatives markets • Based in Chicago with over 200 employees • A 25-member Board of Directors includes seniorrepresentatives from financial institutions, US Futures exchanges as well as Public Representatives

  4. National Futures Association’s Role • Major functions as Registered Futures Association • Enforces rules for customer protection • Conducts arbitration of futures-related disputes • Screens fitness to be a NFA member • NFA also performs functions on behalf of the CFTC • Processes registrations with the CFTC • Screens applicants for registration • Grants floor broker and floor trader registrations for CFTC • Reviews Commodity Pool Disclosure Documents • Premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets

  5. NFAs Services for Eurex US • Trade Practice Surveillance • Trade Practice Surveillance ensures that customer orders are treated fairly and that all Members follow exchange trading rules • Specifically, trade practice surveillance seeks to identify suspicious or illegal trading activities • Market Surveillance • Market surveillance ensures that futures markets are free of manipulative trading, price distortions or market congestion • Markets that accurately reflect underlying cash prices provide hedging and price discovery vehicles that benefit producers and consumers • Membership Background Checks • NFA will assist Eurex US in checking on the background of potential members, helping to ensure that members meet appropriate eligibility standards

  6. Specific Activities subject to trade practice surveillance • Trading ahead of the customer/Front running • Direct/Indirect crossing • (Indirect) Taking the other side of a customer order • Wash trading • Pre-arranged trading • Money passing • Stop order fishing • Marking the close • Irregular error account activity • Transfer trades • Off-order book trades • Trading surroundingmarket events

  7. Specific Activities Subject to Market Surveillance • Total open interest • Spread differential between months • Spread differential between markets • Concentration of open interest • Basis to underlying cash market • Deliveries • Large trader position tracking

  8. Specific Membership Background Checks • Credit checks on firms that want to become members of the Exchange • Disciplinary background checks • Ongoing financial viability checks of member firms through auditing financial statements

  9. NFA is an independent, highly qualified authority • Eurex US chose the National Futures Association to oversee our markets because: • NFA is an independent, non-profit organization • NFA operates without bias towards anyexchange member • NFA is a highly qualified, well-respectedself-regulatory authority • NFA is based in Chicago with a staff of over 200 employees • Eurex US is committed to markets where customers are protected

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