European Options Exchange

The European Options Exchange (EOE) was established in 1978 in Amsterdam, marking a significant development in the European financial markets as the first options exchange on the continent. The exchange was located in the historic Beurs van Berlage building, a notable venue in Amsterdam's financial district.
== History and Development ==
The idea for the EOE emerged in response to the successful establishment of the Chicago Board Options Exchange (CBOE) in 1973. The board of the Amsterdam Securities Exchange recognized the potential of an options exchange to invigorate the local financial market, which was experiencing declining sales at the time. The foundation for the EOE was laid by the Stichting Voorbereiding European Options Exchange, which was responsible for the preparatory work leading to the exchange's launch.
The EOE officially opened on April 4, 1978, with Finance Minister Frans Andriessen presiding over the inauguration. Despite initial challenges, including a lack of investor interest that resulted in a negative equity of 16 million guilders after the first year, the exchange gradually gained traction.
===Regulatory History===
The EOE initially operated under a self-regulatory system, similar to the long-standing tradition of the Amsterdam Stock Exchange. However, the regulatory landscape began to shift in the 1980s due to increasing market complexity and globalization. In 1985, the Dutch government passed the Law on Securities Trading, focusing on regulating off-exchange trade. This development signaled the need for independent supervision, leading to the establishment of the Securities Board of the Netherlands (STE) in 1989. The STE was tasked with monitoring exchange regulations and supervising off-exchange securities trading. In 1997, the EOE merged with the Amsterdam Stock Exchange to form Amsterdam Exchanges. 
The regulatory evolution continued in 2002 when the Netherlands Authority for the Financial Markets (AFM) succeeded the STE as the independent supervisor, with expanded oversight beyond just securities trading. This marked the definitive end of self-regulation for the exchanges, as supervision of market trading was placed entirely in the hands of external supervisors. The Amsterdam Exchange later became part of Euronext in 2000, further internationalizing its operations and regulatory framework.
===AMEX and EOE===
In the 1980s, the American Stock Exchange (AMEX) and the European Options Exchange (EOE) entered into a relationship to facilitate the trading of options on the Major Market Index (MMI). This collaboration was part of a licensing agreement that allowed the EOE to provide trading facilities for MMI options contracts, which were identical to those listed and traded on AMEX. The arrangement was designed to make these options fully fungible between the two exchanges, meaning that options contracts could be traded interchangeably on both exchanges without any difference in terms or conditions.
The Options Clearing Corporation (OCC) was involved in establishing mechanisms for the issuance, clearance, and settlement of these options, ensuring that trades executed on either exchange could be cleared and settled seamlessly. This collaboration was part of a broader trend during the 1980s to create international linkages and facilitate cross-border trading in financial markets.
=== Growth and Merger ===
The early 1980s saw a turnaround for the EOE, driven by a flourishing economy and targeted promotional campaigns. The introduction of put options in May 1987, alongside existing call options, and the launch of options on the EOE index (now known as the AEX index), significantly boosted trading volumes. This period of growth necessitated a move to a larger facility at Rokin 65 in Amsterdam, whose trading floor had been vacated by a move of the stock market to a fully automated format.
In late 1996, a significant consolidation occurred in the Dutch financial markets when the European Options Exchange (EOE) and the Amsterdam Stock Exchange agreed to merge. On December 4, 1996, members of the Options Exchange voted in favor of the merger. Just five days later, on December 9th, members of the Vereniging voor de Effectenhandel (Association for Securities Trading), which operated the Amsterdam Stock Exchange, also approved the merger.
To facilitate this merger, both exchanges had to undergo structural changes. They abandoned their traditional association structures and converted into limited companies. This transformation was crucial to align their organizational structures and pave the way for the merger.
The merger officially took effect on January 1, 1997, with the launch of Amsterdam Exchanges NV (AEX). To capitalize the new entity, members of both exchanges jointly contributed 25 million guilders. This substantial investment demonstrated the commitment of the financial community to the new, unified exchange.
The scope of the merger extended beyond just the two exchanges. It also incorporated the Nederlands Centraal Instituut voor Giraal Effectenverkeer (Necigef), which was responsible for securities settlement, as well as various subsidiaries involved in clearing operations. This comprehensive approach created a more integrated and efficient market infrastructure. 
The formation of Amsterdam Exchanges NV marked a significant milestone in Dutch financial history, combining the stock market with the growing derivatives market. This merger laid the groundwork for future developments, including the exchange's eventual participation in the formation of Euronext in 2000, further expanding its international reach.
== Legacy ==
The European Options Exchange played a pivotal role in the development of the options market in Europe. It introduced sophisticated financial instruments and contributed to the modernization of trading practices, including the transition from physical floor trading to electronic screen trading in 2002.
Today, the legacy of the EOE continues under the management of Euronext Amsterdam, where it remains a key component of the region's financial infrastructure.
== Products and Services ==
The European Options Exchange (EOE), established in Amsterdam on April 4, 1978, initially offered a limited range of products, which expanded over time. Here's an overview of the products traded on the EOE:
* Call options on shares: These were the first products introduced when the exchange opened.
* Put options: Introduced in May 1987, expanding the range of option strategies available to traders.
* Options on the EOE index: Later renamed the AEX index, these index options were introduced after put options, allowing traders to speculate on or hedge against movements in the broader Dutch stock market.
The AEX-Index, Europe's first national blue-chip index, was established on March 4, 1983, and includes 25 top companies from Euronext Amsterdam, such as Royal Dutch Shell and Unilever. It was created by Tjerk Westerterp, the former CEO of the European Options Exchange, who famously designed the index on the back of a cigarette box during a train ride. Initially featuring 13 companies, 11 of which are still represented today, the AEX-Index remains a key benchmark for the Dutch capital market, reflecting the Dutch economy and its major industries.
The EOE started with a focus on equity options, but as it grew and evolved, it likely expanded its product offerings to include options on other asset classes. The exchange experienced significant growth, particularly in the 1980s, as options became increasingly popular among investors.
== Key People ==
== References ==
Category:Options Exchanges
Category:Stock exchanges in the Netherlands
Category:Defunct Stock Exchanges
Category:Financial Markets
Category:Derivatives
Category:Euronext
Category:Euronext Liffe
Category:NYSE Euronext
Category:Euronext Exchanges
Category:NYSE Euronext Exchanges
Category:Euronext Liffe Exchanges