Turquoise plans next phase of derivatives growth
multilateral trading facility (MTF) owned by the London Stock Exchange (LSE),
is plotting further growth of its derivatives market, which could include
emerging markets as well as pan-European products.
theTRADEnews.com, Adrian Farnham, Turquoise’s CEO, said the recent move by
the LSE to secure full ownership of index provider FTSE would be an important
part of Turquoise Derivative’s expanded offering.
“We are looking
to base new derivatives contracts on a selection of indices offered by FTSE by
the end of this year or early 2013,” said Farnham. “In addition to pan-European
blue chip indices, this could include emerging market contracts that build on
the Russian contracts we already offer.”
LSE secured full
ownership of FTSE in December last year, increasing its stake from the 50% stake it already held. The
group also transferred the assets of EDX, which offers trading in Nordic and
Russian derivatives, under the Turquoise Derivatives banner in May.
The platform also
offers trading in FTSE 100 index and options but volumes have so far been
limited because of a lack of fungibility with NYSE Liffe, the derivatives
bourse owned by NYSE Euronext.
refused Anglo-French clearer LCH.Clearnet from offsetting the margin held
against FTSE 100 derivatives traded on its platform with those traded on
Turquoise Derivatives, meaning members are required to hold two pools of open
interest for the same products. Since then, the LSE has entered into a deal to purchase LCH.Clearnet, while NYSE Liffe will from June 2013 terminate its contract with the clearer and bring post-trade services in-house.
In the first six
months of 2012, Turquoise Derivatives traded 8,480 FTSE 100 options contracts and FTSE
100 futures contracts combined, representing a value of US$744 million. Overall value
traded across all derivatives on the platform reached US$32.02 billion in the
same period, with the majority comprising trading in stock options based on the
depository receipts traded on the LSE’s International Order Book.
The ability of competing
trading venues to stymie the growth of new entrants could be prevented in the future by MiFIR, the regulation accompanying MiFID II, which currently requires
trading venues to provide open access to clearing houses and vice versa.
“We are ready to
capitalise on regulatory change to ensure we can grow our network, expand the
products we are able to offer and further develop our post-trade services for
derivatives,” said Farnham.
derivatives trading is set to heat up following the announcement of Nasdaq
OMX’s intention to set up NLX, an MTF for short- and long-term interest rate euro- and sterling-denominated
derivatives in Q1 2013, as well as ICAP’s recent purchase of PLUS Markets Group
stock exchange assets, which it plans to use for its own foray into listed