Nasdaq OMX Group Inc. (NDAQ)’s European derivatives market will open for business May 31, going head to head with the largest futures markets in the region, as it won approval from the U.K. securities regulator.
The London-based NLX will start its interest-rate derivatives platform with six products, including futures on the German bund, Euribor futures and short sterling. It will also offer medium-term German-government debt known as Bobl, Schatz short-term German debt, and the Long Gilt based on U.K. government bonds. London-based LCH.Clearnet Group Ltd. will be the clearinghouse for NLX, reducing the fallout from any default by guaranteeing counterparty payment.
“We have worked closely with the regulators in our application process,” Charlotte Crosswell, Chief Executive Officer of NLX, said in an e-mail today. NLX “brings much needed competition to European interest-rate derivatives.”
Nasdaq, the operator of America’s second-biggest equity exchange, announced plans for the U.K. platform in June last year. NLX is seeking to capitalize as NYSE Euronext (NYX), which is being bought by IntercontinentalExchange Inc. (ICE), moves its clearing from LCH to ICE in London. Customers who trade NYSE’s Liffe derivative contracts will also have to switch. LCH is the world’s largest clearinghouse for interest-rate swaps.
NLX opens for business the same week that Frankfurt-based Eurex relaunches its Euribor contract on June 1, stepping up competition with Liffe, which dominates the market.
Deutsche Boerse AG and NYSE Euronext own Europe’s largest derivatives exchanges. NYSE Euronext’s London-based Liffe dominates the market for short-term interest-rate derivatives. Frankfurt-based Eurex, Europe’s largest futures exchange, handles long-term products. CME Group Inc. (CME) also plans to open a new market, starting with currency futures in London this year.
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