A day after the Securities and Exchange Commission (SEC) approved a “one-pot” cross-margining arrangement between cash fixed income positions cleared by the Depository Trust & Clearing Corporation’s (DTCC) Fixed Income Clearing Corporation (FICC) subsidiary and interest rate futures positions cleared by New York Portfolio Clearing (NYPC), NYSE Liffe U.S. announced that it would launch interest rate futures on March 21. They will list three-month eurodollar futures followed by a full suite of Treasury bond and note contracts on March 28.
NYSE Liffe U.S CEO Tom Callahan said, “We fully understand that competing in the interest rate arena against a franchise as well established and well defended as CME would really take a big idea. For us NYPC is that big idea.”
NYSE Liffe U.S. first announced plans to launch Treasury futures more than a year ago and was waiting on regulatory approval of NYPC, which for the first time will allow cash and futures positions to be offset at one clearinghouse.
NYPC CEO Walt Lukken said, “We believe that our efforts our transformational, that the capital efficiencies it will bring as a result of bridging the securities world and futures world together for the first time at the clearinghouse level bring significant efficiencies to capital to firms that are trading through [NYSE Liffe U.S.] and clearing through NYPC.”
CME Group, in what appeared to be a preemptive move, announced on Monday a new clearing membership that would allow for cross margining of cash and futures.
Lukken added, “There are also some obvious operational advantages as well, including our locked-in delivery process that will allow firms that are taking futures to delivery to allow those to expire in to FICC’s system, which will allow seamless integration of that and eliminate a lot of the inefficiencies of boxing up securities in the current month futures delivery system.”
NYSE Liffe U.S. to Launch Interest Rate Futures on March 21 and March 28
Eurodollar Futures Debut on NYSE Liffe U.S. March 21, U.S. Treasury Futures on March 28
New York, March 2, 2011 – NYSE Liffe U.S., the U.S. futures exchange of NYSE Euronext (NYX), today announced launch dates for U.S. Treasury and Eurodollar futures products to coincide with the launch of New York Portfolio Clearing (NYPC), the innovative new clearing joint venture with The Depository Trust & Clearing Corporation (DTCC). NYSE Liffe U.S. will begin trading Eurodollar futures on March 21, 2011, and will launch 2-year, 5-year and 10-year U.S. Treasury futures along with U.S. Bond and Ultra Bond futures products on March 28, 2011, subject to regulatory filings. These products will be cleared through NYPC, which has received all the required approvals from the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC).
“As a result of the tremendous efforts of the NYSE Liffe U.S., DTCC and NYPC teams, we are thrilled to have received the final approvals necessary to offer this compelling and highly competitive choice to global market participants. The unique combination of these interest-rate products trading on NYSE Liffe U.S. and the clearing efficiencies of NYPC will create an entirely new transaction and risk management paradigm,” said Thomas F. Callahan, CEO, NYSE Liffe U.S. “We thank the CFTC and SEC for their coordinated and thorough review of New York Portfolio Clearing.”
Interest-rate futures traded on NYSE Liffe U.S. will benefit from the powerful capital efficiencies of NYPC’s ‘one-pot’ margining which, for the first time ever, will assess margin across fixed income securities, repos and interest rate futures to more accurately capture the actual risk of a clearing member’s portfolio. Additionally, all U.S. Treasury Futures traded on NYSE Liffe U.S. will benefit from an innovative, streamlined delivery process allowing for the seamless netting of futures and cash securities. These innovations provide unique benefits to global futures market participants by reducing the cost, complexity and risk inherent in the traditional trading and clearing model.
"We thank our members and clients for their unwavering commitment as we have worked in partnership toward planning this revolutionary cross-platform launch,” said Lynn Martin, Chief Operating Officer of NYSE Liffe U.S. “We are excited to bring real competition and choice to the U.S. futures market through this one-of-a-kind service.”
NYSE Liffe U.S. is a global, multi-asset class futures exchange. In addition to liquid mini-sized gold and silver futures, NYSE Liffe U.S. will become the sole U.S. exchange for MSCI-based index futures products on June 17, 2011. On or before this date, futures on two of MSCI's most widely tracked global benchmarks, MSCI Emerging Markets and MSCI EAFE, will cease trading on CME and migrate to NYSE Liffe U.S.
About NYSE Liffe U.S.
In March 2010, the exchange sold a substantial minority ownership stake to six leading market participants, Citadel Securities, DRW Ventures LLC (an affiliate of DRW Trading Group), GETCO, Goldman Sachs, Morgan Stanley and UBS. NYSE Liffe U.S. utilizes the proven LIFFE CONNECT® trading platform designed and maintained by NYSE Technologies that matched nearly 4.7 million contracts per day in 2010 on the NYSE Liffe European markets. Offering a range of global connectivity options, NYSE Liffe U.S. enables its members to efficiently transact on the platform in a highly cost-effective manner while also utilizing other NYSE Euronext exchanges with unique pricing incentives and simplified access.