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September Launch for CME Europe

CME Group will launch its new London-based derivatives exchange, CME Europe, on 9th September, subject to regulatory approval.

Created to expand and enhance CME’s client offering, the new exchange will initially offer trading in foreign exchange futures products as it acts as a competitive alternative to other exchanges in the region. The firm says that the new exchange will offer, “significant operational and capital efficiencies with a regionally relevant product offering.”

As reported in P&L’s Squawkbox in October last year, the Merc has confirmed that CME Europe will initially focus on 30 FX futures products for clients predominantly in Europe, the Middle East, Africa and Asia, as the company submitted its application to the UK’s Financial Services Authority for the new venue to become a registered investment exchange (15 October 2012).

The following products will be available from launch: AUD/USD, GBP/USD, EUR/USD, EUR/GBP, NZD/USD, USD/CAD, USD/JPY, USD/CHF, EUR/DKK, EUR/JPY, EUR/NOK, EUR/SEK, EUR/CHF, USD/ILS, USD/MXN, USD/ZAR, EUR/CNH, EUR/CZK, EUR/HUF, EUR/PLN, EUR/TRY, USD/TRY, USD/CNH, EUR/CNY, USD/UAH, USD/BRL, USD/CNY, USD/INR, USD/KRW and USD/RUB.

CME adds that the new exchange will enable users to trade derivatives under Europe’s regulatory landscape while also accommodating regional trading practices and preferences. The firm also says that new products will be added as the exchange grows, evolving it into a multi-asset class exchange.

Membership to CME Europe will be offered in two forms, clearing and non-clearing, trading participant membership, providing different levels of access to the market and have different fee structures. Members are automatically enrolled in a progressive volume-based fee program; $0.50 fee per contract for ADV 0-20k, up to $0.35 fee per contract on35k plus, will fees reducing further as volume levels are met. Customers of clearing members (non-members) will pay a $1.00 flat fee per contract.

Electronic trades on the exchange will be conducted on CME Globex, the company’s electronic trading system for futures and options, in order to provide access to trading for 23.5 hours per day. If already members, customers will be able to connect through their existing channels, or chose new connection routes.

For block and EFRP trades, CME ClearPort will bring these trades under the rules of CME Europe and CME Clearing Europe for clearing. Participants have the choice of direct access through one of CME’s global hubs, co-location, via one of our clearing members, or through an independent service vendor.

CME Clearing Europe – the firms’ Bank of England-recognised London-based clearing house – will provide central counterparty clearing services, supporting CME Group in offering a complete, locally regulated market, with regional products under European legislation.

CME Direct, the exchange’s free web-based trading screen, will also be available, allowing clients to trade on CME Europe by connecting to both CME Globex and CME Clearport.

The Chicago-based operator confirmed plans for the exchange in August last year, as reported in Squawkbox (22 August 2012), with launch initially targeted for the second quarter of this year. At the time, Terry Duffy, CME Group executive chairman and president, said of the plans, “Having an exchange in London that can leverage the central counterparty model of CME Clearing Europe will allow us to align ourselves even more closely with our regional customers in both listed futures and over-the-counter markets, and provide additional opportunities to our expanding non-US customer base.”

While holding stakes in other international exchanges, in Brazil and Dubai for example, CME Europe will be CME’s first stand-alone trading operation overseas.

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