May 3, 2006

Via Facsimile and U.S. Mail

J. Eugene Marans, Esq.
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue NW
Washington, DC 20006-1801

Dear Mr. Marans:

In your letter dated April 10, 2006, you request, on behalf of your client Eurex Deutschland ("Eurex") and its related parties, a modification to the terms of the no-action letter issued by the Division of Market Regulation on July 27, 2005 ("Eurex No-Action Letter"). In the Eurex No-Action Letter, we stated that the Division would not recommend enforcement action to the Securities and Exchange Commission if employees of Eurex Frankfurt AG and Deutsche Borse AG, and Eurex participants, acted as described in the Eurex No-Action Letter to familiarize certain registered broker-dealers and large financial institutions in the United States with Eurex and certain equity, index, and exchange-traded fund options traded on Eurex.¹

In requesting the Eurex No-Action Letter, you represented that Eurex would institute rules requiring Eurex participants to furnish to Eligible Broker-Dealers and Eligible Institutions a Eurex Disclosure Document before accepting an order from that Eligible Broker-Dealer or Eligible Institution to purchase or sell Options. The rules also would require that Eurex participants obtain written representations from any Eligible Broker-Dealer or Eligible Institution seeking to purchase or sell Options, signed by an appropriate officer, to the following effect:

1. it is an Eligible Broker-Dealer or Eligible Institution, and as such it (a) owns and invests on a discretionary basis a specified amount of eligible securities sufficient for it to be a qualified institutional buyer under Rule 144A under the Securities Act (and if a bank, savings and loan association, or other thrift institution, has net worth meeting the requirements of Rule 144A under the Securities Act) and (b) has had prior actual experience in the U.S. standardized options markets and as a result thereof has received the options disclosure document entitled "Characteristics and Risks of Standardized Options" that is prepared by the Options Clearing Corporation and the U.S. options exchanges;
    
2. it has received the Eurex Disclosure Document;
    
3. its transactions in Options will be for its own account or for the account of another Eligible Broker-Dealer or Eligible Institution or for the managed account of a non-U.S. person within the meaning of Rule 902(k)(2)(i) of Regulation S under the Securities Act;
    
4. it will not transfer any interest or participation in an Option it has purchased or written to any other U.S. person, or to any person in the United States, that is not an Eligible Broker-Dealer or Eligible Institution;
    
5. it will cause any disposition of an Option it has purchased or written to be effected only on Eurex (or submitted to the Eurex Clearing OTC Block Trade Facility as described above) and settled by Eurex Clearing, and it understands that any required payments for premium, settlement, exercise, or closing of any Option with respect to which it has a contract with the Eurex participant must be made in the designated currency. It also understands that if it has a contract with a Eurex participant as a writer of an Option, margin must be provided to the Eurex participant in such form and amount as determined by such Eurex participant, and such Eurex participant, (a) if a Non-Clearing Member, must provide margin to its Clearing Member in such form and amount as determined by that Clearing Member; or (b) if a Clearing Member, must maintain, measure, and deposit margin on such Option with Eurex Clearing in such form and amount as determined by Eurex Clearing;
    
6. it understands that Equity Options on equity securities of U.S. issuers that are traded on Eurex are not available for distribution to U.S. persons at this time;
    
7. if it is an Eligible Broker-Dealer or Eligible Institution acting on behalf of another Eligible Broker-Dealer or Eligible Institution that is not a managed account, it has obtained from the other a written representation to the same effect as the foregoing and will provide it to the Eurex participant upon demand; and
    
8. it will notify the Eurex participant of any change in the foregoing representations prior to placing any future order, and the foregoing representations will be deemed to be made with respect to each order it gives to the Eurex participant.

In your letter, you state that Eurex has concluded that the German legal framework does not contain a specific legal basis for exchanges to adopt compliance rules referring to foreign law. Accordingly, Eurex proposes to incorporate the substance of the foregoing rules into a compliance circular issued by Eurex as an order rather than as rules. You attached as an exhibit to your letter a form of the compliance circular to be issued by Eurex to its participants, together with a form letter to be executed by a Eurex participant upon receipt of the circular, in which the Eurex participant agrees to comply with the requirements outlined in the Eurex No-Action Letter as set forth in the circular.

Eurex further represents that Eurex is authorized under German public law to issue orders addressed to all Eurex participants that impose one-time or continuing obligations on these participants. Eurex also represents that, pursuant to the German Exchange Act, Eurex is required to establish and maintain a disciplinary committee that has the express authority to impose sanctions on participants for violations of exchange orders as well as German Exchange Act provisions and the rules thereunder. Eurex notes that such sanctions may include a reprimand, fine or exclusion from trading on the exchange.

We confirm that the actions Eurex proposes to take, as summarized above and set forth more fully in your letter dated April 10, 2006, are consistent with the relief granted to your client in the Eurex No-Action Letter. Except as expressly provided herein, nothing in this letter shall be deemed to waive or modify any of the provisions of the Eurex No-Action Letter.

The position of the Division in this letter concerns enforcement action only and does not represent a conclusion on the applicability of statutory or regulatory provisions of the federal securities laws. Furthermore, the position of the Division in this letter is based on the representations made in the April 10, 2006 letter and in the July 22, 2005 letter requesting no-action relief. Any different facts or conditions might require a different response, and this position is subject to modification or revocation if the facts and representations are altered.

Endnotes

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¹Capitalized terms used in this letter without definition have the meanings given to them in the Eurex No-Action Letter.

Incoming Letter:

The Incoming Letter is in Acrobat format.

http://www.sec.gov/divisions/marketreg/mr-noaction/eurex050306.htm