The Philadelphia Stock Exchange (PHLX) announced in September that its wholly owned subsidiary, the Philadelphia Board of Trade (PBOT), will relaunch as a fully electronic marketplace on Oct. 6.
PBOT, which toyed with the concept of listing futures on event markets and U.S. Treasuries in the run-up to the relaunch, will begin by listing products on the British Bankers’ Association Libor reference rates through an exclusive agreement with the British Bankers Association. PBOT’s first product listing will be Daily Expiry U.S. Dollar BBA Libor futures with the initial listing of a daily maturity for every business day the U.S. Federal Reserve is open for 11-and-a-half years. “We will list new products utilizing these rates and we can link these contracts together to replicate the existing OTC swaps market such that you can trade by linking groups of these contracts together,” says Todd McCormick, a managing director of the DPG group at Fimat LLC and founding partner of Derivative Designs. “For example, if you wanted to do a five-year swap, you would grab the first 20 contracts and that would replicate the five-year swap in the OTC world, except that it is a series of futures contracts and not a series of forwards.”
Daniel R. Carrigan, VP of new product development at PHLX says, “On the equity options side you can trade flex options for any day that you want. On the futures side you have standardized quarterly contracts, but there’s never been an occasion where an exchange has offered daily contracts so that the end user can decide which trading day best suits his or her needs.”
PBOT will use the PHLX options trading platform and will offer products and trading instruments that complement existing futures product suites trading in the United States and internationally. Other products will eventually follow.
“We are in the midst of executing our strategy to have multiple asset strategies traded on our exchange platform,” Carrigan says. “Our interest is to deliver trading opportunities to our customers and allow the customer to trade many markets and thousands of products through one connection to the PHLX.”
The Options Clearing Corp. will clear all PBOT trades.