LONDON, March 11 U.S. futures market operator
CME has joined a growing list of companies seeking to
cash in on new rules on derivatives trading by securing
regulatory approval for a London-based derivatives exchange.
The CME said on Tuesday that the exchange will launch on
April 27, completing CME's "vertical silo", a one-stop market
offering services from trading to clearing of transactions.
Global financial regulators want to push trading in
derivatives, which include commodities and other financial
instruments, on to exchanges to improve transparency and lower
risk. Derivatives have mainly been traded over the counter
between banks and trading houses.
Other exchanges are also looking to capitalise on the
regulatory changes and grab a share of the market. U.S. rival
IntercontinentalExchange acquired Liffe, Europe's
second-largest derivatives market, in a $10 billion-plus merger
with NYSE Euronext last year.
Deutsche Boerse's Eurex, the region's largest,
has said it will soon expand into forex derivatives.
Nasdaq OMX, which launched a London-based interest
rate derivatives market last May, is considering offering
trading and clearing of both spot forex and derivatives, one its
executive vice presidents told Reuters.
CME's European exchange, its first overseas market, will
list commodities products and 30 foreign exchange futures upon
launch, provided regulators are satisfied that its clearing
members are able to physically settle the forex contracts by
Lee Betsill, chief executive of CME Clearing Europe, told
Reuters the company was confident that they will be ready by the
launch date. Additional forex, commodities and energy products
will be added over time, Betsill said.
CME said the new exchange responded to customers' needs for
more ways to manage risk and access liquidity locally.
Spokesman Allan Schoenberg said the exchange had already
received applications from more than 30 firms wishing to become
CME, which owns the Chicago Mercantile Exchange, the Chicago
Board of Trade and the New York Mercantile Exchange, had
originally planned to launch the exchange in September last year
but had to delay it twice while regulators considered the
application and the company dealt will a technical problem.