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Exchanges & Clearing

Analysts Steady on CME Forecast After NEX Acquisition Equities analysts at UBS have issued a research report on the merger between CME Group and NEX Group, stating that while they are confident in the potential upsides to this deal, the benefits might not start to materialise for at least a year. Having previously downgraded CME shares from “Buy” to “Neutral”, the UBS analysts Alex Kramm and John Goode decided to maintain the current rating, with an unchanged 12-month price target of $204 per share. At the time the report was issued, CME shares were trading at $189.51.
Flow Traders to Provide Liquidity for Eurex FX Futures Flow Traders has become a liquidity provider for Eurex FX futures products. Effective immediately, Flow Traders will provide liquidity throughout the whole range of monthly and quarterly deliverable FX futures, as well as in the non-deliverable rolling spot futures offered by Eurex. Robbert Sijbrandij, head of FX at Flow Traders, says: “As a specialist liquidity provider focused on exchange traded products (ETPs), we welcome the FX futures offering from Eurex, which broadens the reach and potential of listed currencies globally. We believe Eurex rolling spot FX futures will be a great addition to our FX portfolio. Going forward, Flow Traders will provide liquidity in all Eurex FX futures on a continuous basis. We look forward to working with Eurex on this.”
SeedCX Partners with Deltix for Crypto Trading Seed CX, an exchange for institutional trading and settlement of spot digital asset products, announces that investors can now access its market via Deltix’s crypto-trading platform, CryptoCortex. Deltix, which launched the CryptoCortex platform this year, provides quantitative research, analytics and algorithmic trading solutions for equities, futures, options and FX. “Deltix’s CryptoCortex trading platform is preferred by the world’s most sophisticated quantitative trading firms and market makers, and we expect strong demand for trading on Seed CX’s spot and derivatives markets,” says Ilya Gorelik, founder and CEO of Deltix.
Cboe Targets Regional Banks with UBS Credit Arrangement Cboe FX announces today that UBS is acting as a Central Credit Intermediary (CCI) for certain counterparties wanting to access its platform, with an eye to bringing on more liquidity from regional banks. Under the new arrangement, regional banks or other financial institutions that might have limited bilateral credit can leverage UBS as a spot FX intermediary to alleviate this hurdle, settling all trades exclusively with UBS. The potential benefit of this for these institutions, according to the exchange, is that they will gain exposure to a greater number of Cboe FX participants despite the absence of direct credit relationships.
ABN AMRO Offers Clearing for Eurex FX Futures ABN AMRO Clearing today has started clearing Eurex FX futures and options for its clients. The group now provides immediate support for the “classic FX” derivative contracts with attributes including monthly and quarterly expiries, as well as the rolling spot futures product that is now live. “Our clients have made our decision to support the Eurex FX exchange traded derivatives offering very easy,” says Michael van Dijk, global product manager, FX, at ABN AMRO Clearing. “We consistently post over 20% market shares of transactions cleared on most relevant derivatives exchanges globally.”
FIA Updates CCP Position Paper Following Nordic Default The Futures Industry Association (FIA) has released updated recommendations to improve clearinghouse risk management following recent market developments. The developments in question are the placing of a member of Nasdaq Clearing’s Nordic market in default in September. The losses were sufficiently large to exceed the margin provided by the defaulter and the CCP’s own skin in the game and required the use of the commodities default fund. This was the first use of a default fund by a major CCP since a default on KRX, the South Korean exchange, in 2013.
LCH Compresses $4.5 Billion in FX Outstandings LCH says that its ForexClear members have reduced their notional outstanding by $4.5 billion through the use of the service’s compression solution. Citi and Standard Chartered Bank are among the first participants to actively compress their trades at ForexClear. Compression is the process by which clearing members and their clients can eliminate offsetting trades to reduce notional outstanding and the number of line items in a portfolio. Capital requirements such as those introduced under the Basel III leverage ratio have incentivised banks to reduce notional outstanding.
LCH Gets Japan FX Clearing Approval; Clears First Swaption LCH has received approval for an extension to its clearing licence from the Japanese Financial Services Agency (FSA). The licence extension was granted on 31 October 2018 and enables LCH’s ForexClear service to clear NDFs on behalf of banks and clients based in Japan. This latest approval comes in addition to LCH’s existing licence to clear non-Yen OTC interest rate derivatives in Japan, which was granted by the FSA in 2016. Prior to LCH obtaining this latest licence, Japanese customers could only access ForexClear through international subsidiaries.
NEX, Eurex, Launch Repo Clearing Solution NEX Markets has announced that BrokerTec Europe has worked with Eurex Clearing to launch a new clearing solution for the European repo market. The new clearing solution will be live by the end of 2018 and will allow existing BrokerTec clients to select to clear their repo transactions via Eurex Clearing. “This solution will allow market participants to consolidate their European repo and corresponding OTC and listed derivatives business under the single risk framework of Eurex Clearing, via the BrokerTec platform,” the firms say.
CME Clears Final Hurdle for NEX Acquisition CME Group has received clearance from the UK Competition and Markets Authority for its acquisition of NEX Group. This means that all of the conditions relating to regulatory and antitrust approvals for the deal have now been satisfied or waived. The boards of NEX and CME announced on March 29, 2018, that they had reached an agreement on the terms of a recommended share and cash acquisition of the entire issued and to-be-issued share capital of NEX. On May 18, 2018, NEX shareholders approved the terms of the acquisition.