Upstart exchange ELX made a splash on June 1 when it announced that Goldman Sachs would become a founding partner. ELX, which is backed by a consortium of financial institutions, received approval from the Commodity Futures Trading Commission on May 27 to become a designated contract market.
“Goldman Sachs is a significant driver of proprietary and customer flow in the markets we intend to launch with. ELX Futures has an even better base with which to start and grow than ever before,” says Neal Wolkoff, CEO of ELX.
When ELX was in its early stages of development in December 2007, Goldman Sachs was not among the investment banks that backed it. Why Goldman has stepped in now is still up for debate.
“Goldman joining is a vote of support for the venture. Perhaps Goldman wanted to make sure they were able to hedge their bets in terms of supporting the platform and interacting with the platform,” says Andy Nybo, head of derivatives for Tabb Group.
“From the perspective of ELX Futures, what is significant is the depth of our team as we start in business, not at the time the legal documents were created,” Wolkoff says of the timing of the partnership.
ELX was set to begin live trading in June, starting with U.S. Treasury futures (2, 5, 10 year notes and 30 year bonds). “We will offer a lower level of thresholds for block trading; 1,000 contracts for 2s, 5s, and 10s, and 500 contracts for 30s,” Wolkoff says.