Brendan Bradley, Global Head of Product Strategy, Eurex

"The customer is always right." —Harry
Gordon Selfridge, Sr. When Selfridge coined that phrase in the early 20th century, his selfnamed London store's specialty was dealing with a finicky, hard-to-please European clientele. Indeed, he built a retail empire that still exists today out of satisfying his customers' very particular wants and needs.

The Canary Wharf offices of Eurex, the world's largest futures and options exchange, are a few miles away from Selfridge's Oxford Street location. And although their industries could not be more different, it is apparent from Eurex's impressive offices, high in the beautiful Canada Square office tower, that their philosophies are nearly identical.

In fact, Brendan Bradley, Global Head of Product Strategy at Eurex, seems to be writing a page in Selfridge's book. This is immediately evident in conversation, as he describes his team's intense efforts to create investible products at a time when markets were seizing up in 2008. This high-energy group had to consider ways to facilitate investor hedging requirements when institutions and individuals alike were concerned with protecting whatever assets had not been devastated by down markets.

"Due to the credit crunch, there was, I guess you could call it, a 'flight to liquidity,' with users focusing on the most liquid products. So the demand for sector rotation trading strategies—in essence, demand for some of our products—decreased along with the rest of the markets," says Brendan, who has been in his position since 2006. "Interest in global sector products was lower than originally anticipated, and there still remains some lingering counterparty credit concern about OTC derivatives based on these products."

Brendan tried to figure out the unfathomable markets: Which way were they moving? What did money managers need and how could he deliver it? While there were challenges to be met, what were the opportunities that might appear?

Wanted: a bigger universe

He saw that there was a movement in the industry in recent years: broader sector coverage. Clients were no longer content with limited geography that some products offered.

"In Europe, we've seen a greater trend toward the pan-European area, where the focus had been on Euro-only denominated sectors," he explains. "And the trend continues: Companies have moved toward offering global products and services, while benefiting from enormous economies of scale in production, distribution, marketing and management."

Brendan saw that institutions and traders were increasingly looking for worldwide opportunities. The solution was simple: create products that are more attractive not just for what they do, but for whom (and what) they cover.

"It's become more important than ever to identify the most attractive companies within a given sector globally rather than within a given region. Thus, globalization has also brought with it an emergence of new multinational, mega-corporations."

Turning to a known entity

Dow Jones Indexes and STOXX Limited (a joint venture between Deutsche Boerse Group, Dow Jones & Company and SIX Swiss Exchange) have had a solid relationship with Eurex since March 2001, when Eurex first licensed the

Dow Jones EURO STOXX 50 and Dow Jones EURO STOX Sector Indexes. Since then, the exchange has continuously extended its sector product range and has become the leading global exchange for sector-based products.

When Eurex saw a need to find a solution for market participants looking for something global, new and useful in 2008, it licensed the Dow Jones Sector Titans Indexes^SM (Banks, Insurance, Oil & Gas, Telecommunications and Utilities).

"Given that we had seen a shift in volume focus from Eurozone products to pan-European sector products, the Dow Jones Sector Titans Indexes^SM were licensed to broaden the geographic coverage of our product range further."

This is not to say that Eurex lacked product before this. Its worldwide distribution network has 406 participants in 24 countries with more than 8,600 registered traders, trading more than 1,000 products in 13 different product categories.

Solutions for every need

"Dow Jones and STOXX are strong, recognized names in Europe," says Brendan. "Their index products are high quality and the data is stellar. We've had a longtime and very successful business relationship with them and we expect to continue to do so in the future. Products like the Sector Titans indexes we were discussing are clear and transparent. The fact that they are limited to a top 30 in their index components makes them very 'tradable' indexes."

"You know, it's important to find the right balance, like anything else in life," adds Brendan. "You need to be able to satisfy a lot of players: the sell-side, which wants to replicate an index and provide the right liquidity; and the buy-side players, who require diversity, can hedge and generally feel confident in their asset allocation ability."

"I think the reason we all like the Dow Jones/STOX indexes so much is that they have everything covered so well. They make it easier for us to find solutions for our money managers who depend on us. That's our raison d'être, if you will—finding solutions, for whatever our clients need."

After spending an afternoon with Brendan and his Eurex team, another Selfridge quote comes to mind:

"The boss knows how it is done; the leader shows how."