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CME Group launches new energy brokerage platform
(Reuters) - Energy and commodity exchange operator CME Group (CME.O) launched a new service on Tuesday in a bid to offer side-by-side trading of exchange-listed and over-the-counter energy products on a unified trading platform.
The new service, CME Direct, will allow brokers to handle customer accounts on one platform, rather than having to switch between the exchange's Globex and Clearport systems, said Michel Everaert, managing director, OTC Solutions, at the CME.
"This will make it easier to trade CME products by making it easier to access all that the exchange has to offer," said Everaert.
The initial group of products offered on CME Direct include New York Mercantile Exchange WTI, NYMEX Brent, Dubai Mercantile Exchange Oman crude oil, NYMEX RBOB, NYMEX Heating Oil, and the Henry Hub Natural Gas futures contract.
CME licensed the CME Direct technology to leading brokers that operate in both the exchange-traded and OTC markets, including Marex Spectron, Traditional Financial Services and Tullett Prebon Traders.
More brokers will be added to the pool once they apply to the exchange, said Everaert.
Upon hearing of CME Direct and its line-up of brokerage houses, the initial reaction from some members of the brokerage community was that CME was setting up a mini-exchange and funneling business to a favored group of brokers.
"I might as well just give up now. The deck is stacked even more against me," said a prominent New York-based broker before learning that he could apply to join the pool of brokers on the new service.
CME developed the service as a way to streamline order-taking and processing as well as for record-keeping purposes.
Everaert said record-keeping and compliance issues related to the Dodd-Frank financial industry reforms were among the main reasons for developing CME Direct, along with interest from energy companies.
"CME Direct is a big step forward for markets to comply with current and anticipated market regulations, including those proposed under the Dodd-Frank Act and MIFID that call for more transparency, automated trading, data reporting and clearing in OTC markets, he added."
CME plans future extensions of this service into the other markets it serves.
(Reporting by Jeffrey Kerr; editing by John Wallace)
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