CME Group delays London exchange launch

CHICAGO Fri Sep 6, 2013 4:18pm EDT

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CHICAGO (Reuters) - CME Group Inc (CME.O), the biggest U.S. futures market operator, told customers on Friday its first exchange abroad will not open next week as planned.

The company postponed the launch of London-based CME Europe Ltd to September 29, for a trade date of September 30, from September 9, according to a memo to customers.

"We are currently working very closely with regulators in order to achieve both recognition and a successful CME Europe launch," CME said in the notice.

CME told customers it will provide "a further update to the timetable of the launch in the coming weeks and will keep you informed of any announcements regarding the regulatory recognition process."

CME spokesman Allan Schoenberg declined to comment beyond the notice.

CME, which owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, has applied to the UK's Financial Conduct Authority for approval to open the London-based market. It is set to offer 30 foreign-exchange futures products, according to CME's website.

Chris Hamilton, a spokesman for the Financial Conduct Authority, declined to comment.

CME has stakes in several foreign exchanges, including in Brazil and Dubai, but London would be its first solo run in an overseas market.

The delayed launch is not overly concerning because exchanges' new initiatives often run into hiccups, said Gaston Ceron, equity analyst for Morningstar in Chicago.

""If it's just a few weeks, it doesn't seem hugely dramatic," he said about CME's delay. "It's something to keep an eye on to make sure that things do indeed progress."

CME's chief executive officer, Malaysia-born Phupinder Gill, took the reins of the Chicago-based company last year, vowing an international perspective for the 165-year-old U.S. futures powerhouse.

CME last month reported a 27 percent rise in quarterly profit, beating expectations, as trading jumped both at home and abroad.

The rise was driven in large part by renewed market speculation over when the U.S. Federal Reserve will exit its bond-buying stimulus program, which helped buoy trading of CME's flagship interest-rate futures contracts. It also suggested Gill's focus on international markets was paying off, as trading from Asia and Latin America rose to record highs.

(Reporting by Tom Polansek; Editing by David Gregorio)

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