U.S. futures market operator CME (CME.O) has joined a growing list of companies seeking to cash in on new rules on derivatives trading by securing regulatory approval for a London-based derivatives exchange.
The CME said on Tuesday that the exchange will launch on April 27, completing CME's "vertical silo", a one-stop market offering services from trading to clearing of transactions.
Global financial regulators want to push trading in derivatives, which include commodities and other financial instruments, on to exchanges to improve transparency and lower risk. Derivatives have mainly been traded over the counter between banks and trading houses.
Other exchanges are also looking to capitalize on the regulatory changes and grab a share of the market. U.S. rival IntercontinentalExchange (ICE.N) acquired Liffe, Europe's second-largest derivatives market, in a $10 billion-plus merger with NYSE Euronext last year.
Deutsche Boerse's (DB1Gn.DE) Eurex, the region's largest, has said it will soon expand into forex derivatives.
Nasdaq OMX (NDAQ.O), which launched a London-based interest rate derivatives market last May, is considering offering trading and clearing of both spot forex and derivatives, one its executive vice presidents told Reuters.
CME's European exchange, its first overseas market, will list commodities products and 30 foreign exchange futures upon launch, provided regulators are satisfied that its clearing members are able to physically settle the forex contracts by that time.
Lee Betsill, chief executive of CME Clearing Europe, told Reuters the company was confident that they will be ready by the launch date. Additional forex, commodities and energy products will be added over time, Betsill said.
CME said the new exchange responded to customers' needs for more ways to manage risk and access liquidity locally.
Spokesman Allan Schoenberg said the exchange had already received applications from more than 30 firms wishing to become members.
CME, which owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, had originally planned to launch the exchange in September last year but had to delay it twice while regulators considered the application and the company dealt will a technical problem.