FN: Exchange-traded market set for bigger future

01 March 2011

It is estimated that the new group formed by the merger of NYSE Euronext and Deutsche Börse – yet to be christened – will derive 37% of its net revenues from derivatives trading and derivatives clearing. In comparison, equity trading will supply less than 30%.

In the wake of the crisis and subsequent regulatory initiatives, exchange trading of derivatives is set to become very big business indeed. NYSE Euronext and Deutsche Börse in February announced their intention to merge to create the world’s biggest futures exchange, and the creation of a global listed derivatives instrument powerhouse is central to their plans.

At the beginning of this month, the CFTC granted “derivatives clearing organisation status” to New York Portfolio Clearing, the clearing house developed by NYSE Liffe (in conjunction with the Depository Trust & Clearing Corporation). Approval by the Securities and Exchange Commission is expected within the next couple of weeks, according to a spokesman for NYSE Euronext in London.

The CME has launched a clearing venture of its own. In February it announced it had recruited 10 dealers as inaugural members of its OTC interest-rate swaps clearing service, which was first unveiled last October. Since launch, the service has cleared around $1bn of interest rate swaps, but, just as clearly as does NYSE Euronext, it knows which way the wind is blowing and that derivatives clearing is set to be very big business in the next few years.

Full article (FN subscription needed) 

© Financial News