CME Group Inc. (CME), which plans to open a derivatives market in London next year for currency futures, will add foreign-exchange options as it expands the service.
CME Europe will focus on boosting volume in all of its products to 5,000 to 10,000 contracts daily, a level that will encourage traders to use the system, Robert Ray, chief executive officer of the new exchange, said in an interview today.
The owner of the world’s biggest futures exchange will start discussing options products with U.K. regulators soon, Ray said at the SFOA’s annual conference for derivatives exchanges and regulators in Interlaken, Switzerland. CME will consider interest-rate swaps and commodity-based products for trading in Europe once the market in London has established liquidity in currency contracts, he said.
“We are focusing on non-U.S. clients, utilizing existing products and then new products,” Ray said. “We are looking at underserved markets. There has been a real lack of creativity in terms of expanding outside core products.”
The new London exchange will compete with Eurex and Liffe, the largest derivatives venues in Europe. NYSE Euronext’s London-based Liffe offers gilts, short-sterling and Euribor futures, while Frankfurt-based Eurex has contracts on German and French bonds. European Union antitrust regulators blocked the two from merging in February, saying the combination would stifle competition in derivatives.
CME has been working on plans for the London exchange since autumn 2010, Ray said today, adding that an Asian venue isn’t out of the question in future.
“Everything is up for consideration,” he said. “There is a familiarity with London. Asia Pacific is fragmented -- culturally, legally -- and until you get your arms around it it’s a tough one.”
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