European Exchange – Eurex

Of the many commodity trading markets in the world, the European Exchange, otherwise known as the EUREX is one of the largest. Established in 1998 and located out of Frankfurt, Germany, the EUREX specialises in both equity and commodity-based derivatives. Members of this exchange can execute buy and sell orders using a joint trading and clearing system. For this reason, the EUREX established itself as one of the first markets to exploit a fully electronic trading platform.

The EUREX is largely concerned with derivative trading; that is, the ability to trade on a future price without needing to hold actual shares or physical assets. Due to this focus on derivative trading, it can be seen as a potential hedge against larger market movements. Many commodity traders take advantage of the electronic and therefore exceedingly liquid trading platform. If we then combine this with some of the advantages of derivatives trading; namely leveraging and the ability for one to benefit from both the rise and fall of a particular commodity price, we can begin to see why the average volume of the EUREX is notably high, with 11.2 million contracts daily in May of 2012.

As a direct result of the economic conditions in Europe at the present and allowing for continued negative market sentiment for the remainder of 2012, many commodity traders view the EUREX as a useful tool to counteract open market volatility. By understanding derivatives as a commodity trading tool, there exists the potential for profit here even while the equity markets still struggle to gain ground.

>> Read more about the other Commodity Trading Exchanges