Nasdaq expands global commodities initiative with energy derivatives

March 11, 2015 11:47 AM

Nasdaq announced the establishment of a new energy futures market with the support of leading commodities participants. Nasdaq Futures will offer competitive pricing, an innovative clearing solution and high-performance technology for futures and options based on key energy benchmarks including oil, natural gas and US power, which will launch mid-2015 pending regulatory approval.

Nasdaq has secured support from prominent trading firms, inter-dealer brokers, and futures commission merchants (FCMs) to facilitate broad product distribution and early liquidity. Founding market participants include ABN AMRO Group, Advantage Futures, Goldman Sachs, JP Morgan, Morgan Stanley1 and Virtu Financial.

“Our strategy is always to meet demand where competition is lacking, and our global benchmark product suite will provide commodity market participants across the planet with a new solution to meet their trading and hedging needs.” said Hans-Ole Jochumsen, President of Nasdaq. “We will leverage our market expertise and the client relationships we’ve established through our global commodities business, which already includes the world’s most liquid electricity market and the leading market for freight derivatives, as well as trading in German, Dutch and UK energy derivatives.”

Nasdaq will offer cash-settled energy derivatives with a transparent fee structure. As the products will be cleared through The Options Clearing Corporation (OCC), market participants will also benefit from OCC’s more than 40 years’ experience in derivatives clearing and its industry utility clearing model that passes on operating efficiencies in the form of reduced costs.

“OCC has a proud history of clearing a wide variety of derivatives products for NASDAQ,” said Michael McClain, President and Chief Operating Officer of OCC. “We look forward to expanding the use of our world-class operational and risk management infrastructure to clear energy derivatives for NFX.”

NFX, the exchange group’s US-based designated contract market (DCM), will leverage the exchange group’s transformative Genium INET technology, and the platform will be domiciled in Chicago.  The platform provides open and neutral access, and firms will be able to access the market through proprietary order management systems, broker platforms, and leading independent software vendors.

Nasdaq’s Global Commodities business offers trading and clearing solutions for various related assets including power, natural gas and carbon emission markets, tanker and dry cargo freight, fuel oil, seafood derivatives, iron ore, electricity certificates and clearing services. With market makers, liquidity providers and competitive fees, Nasdaq provides a liquid, transparent and efficient marketplace which appeals to all types of trading entities.

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