CME, CBOE TO LAUNCH INTERNATIONAL STOCK INDEX
The Chicago Mercantile Exchange, CME,
and the Chicago Board Options Exchange, CBOE, announced today
that they will trade futures and options, respectively, on an
index of international securities compiled by Morgan Stanley
Group Inc.
    Morgan Stanley said it has agreed to license the exchanges
to use the Morgan Stanley Capital International Europe,
Australia and Far East, or EAFE, stock index as the trading
basis.
    The EAFE index is comprised of 900 international stocks
from 16 nations in Europe, the Far East, and Australia.
    "The EAFE is the only instrument by which world markets are
measured," CME special counsel Leo Melamed said at a news
conference announcing the agreement.
    CME Chairman Jack Sandner noted that one-third of the
exchange's daily trading volume now derives from overseas.
    "The success of our index markets, particularly the S and P
index, is ample precedent to forging ahead" in international
markets, he said.
    Mark Sladkus, publisher of Morgan Stanley Capital
International Perspective, said Japanese bank stocks represent
the largest portion of the index.
    The officials said the exchanges have not yet submitted the
EAFE index to the Securities and Exchange Commission and the
Commodities Futures Trading Commission for approval.
    However, Melamed said approval is not expected to be
granted quickly, and the exchanges did not set a starting date
for the new contracts.
    The EAFE index is tabulated daily, but Sladkus said
real-time calculation will be introduced when trading begins.
    The conflicting opening and closing of international
securities markets will have to be accommodated in the
calculations, he noted.
    Morgan Stanley has been calculating the EAFE index weekly
since 1970 and daily since 1972.
    The CME and CBOE will negotiate with a third party to be
"an independent monitor ... the guardian" of the index, Melamed
said. "Morgan will remove itself from deciding which stocks
move in and out of the index."
 Reuter
