SWX Group and Deutsche Boerse AG announced that they will create a new exchange, to be known as “Alex”, which will trade their structured products.

SWX and Deutsche Boerse will combine their trading activities in structured products as of January 1 2007 in a jointly owned subsidiary known as “Alex”. Alex has set the goal of becoming Europe’s leading exchange in this market segment.

The two firms signed an agreement to found and operate a joint securities exchange organization. With this cooperative venture, the SWX Group and Deutsche Boerse are expanding their existing collaboration, which includes Eurex and STOXX. Eurex is the world’s largest futures and options exchange, and STOXX is Europe’s leading provider of securities market indices.

Alex will focus exclusively on structured products. “As a specialized exchange, it can address more directly the specific needs of customers in this segment,” the firms said. “The advantages of Alex also lie in the aggregated liquidity that will be attracted to this centralised trading venue from all corners of Europe and a large network of participants.”

“Moreover, Alex will utilise various pricing procedures. Issuers may choose the market model that is best suited to the trading of their structured products,” they added. “This new European specialised exchange is also planning to implement in the foreseeable future the clearing and settlement structures that will enable crossborder transactions to be conducted at local tariffs.”

Alex will operate domestically regulated exchanges in both Germany and Switzerland. In an initial step, Alex will be the parent of a new exchange in Switzerland, into which SWX will spin-off its existing business in warrants and structured products. Simultaneously, Alex will become co-parent of the warrants and certificate trading business on the Frankfurt Exchange, thus gaining a link to European participants and issuers.

The Alex holding company will have its registered office in Luxembourg, with subsidiary companies domiciled in Germany and Switzerland. The Alex joint venture and the founding of the exchanges still require approval from the supervisory board of Deutsche Boerse, as well as permission from the surveillance and control authorities in Germany and Switzerland.