In Part Two of Otto Nageli's interview with JLN for the History of Financial Futures series, Nageli talked about the part DTB, the forerunner of Eurex, played in repatriating the bund contract and the establishment of Eurex.
Nageli said German regulators considered futures and options to be gambling back then. "That was the main issue for the banks," he said. "They had no legal environment that would be fit for creating a derivative market. But they insisted they needed a futures contract on the bund."
Liffe in London offered the bund futures contract first, in a market where the underlying was a key product. DTB eventually captured volume in Bund futures and options away from Liffe, the only exchange to wrest liquidity away from an established liquidity pool. Once Eurex was established, Nageli said, it became an issue of open outcry vs. electronic trading.
He talked about all the nascent exchanges in Europe at the time. These exchanges were forming mostly because of interest rates and foreign exchange, he said. There was a big need for hedging some of these products.
Nageli also talked about the influence of Chicago on these exchanges. At the early stage of these markets, he said, Chicago played an important role and the exchanges were eager to benefit from Chicago's longstanding exchange know-how.
He spoke about how industry conferences connected the markets and the players, and how the Burgenstock conference came to be set up, eventually rivaling the Boca Raton derivatives conference in importance. He also discussed Eurex's transformation into a for profit company.