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Dec 13, 2012 ||
Allan Schoenberg ||
Our business is one built on a culture and history of innovation and as an organization we are constantly looking for ways that we can help our global set of customers better manage risk. Last week at the Futures and Options World (FOW) award ceremony in London it was a shining moment as not only were our own efforts recognized but also the efforts of our partner exchanges. Here’s a rundown by FOW of the awards and recognition from the evening:
Editor’s Note: The following is reprinted with the permission of FOW
The G20 mandate of 2009 to trade OTC derivatives on electronic platforms where appropriate looks set to fundamentally change large swathes of the industry. So it is no surprise that the an initiative designed around these reforms takes home a gong this year. However, the fact that it is an exchange that is honored is significant as the focus for SEF platforms and aggregators has been predominantly on banks and brokers. CME Direct was launched in May as a platform to trade OTC and exchange traded energy products on one platform. The launch threw the gauntlet down to other exchanges also looking at how to capitalise on the shift to electronic platforms and was hailed by one judge as “a significant step forward in the move to more transparent trading of OTC derivatives”.
You can learn more about CME Direct on our website.
CME Clearing is the undoubted front runner in the race to gain traction in client clearing ahead of the new OTC regulatory framework that will come into force next year. The clearinghouse has set the standard in The Americas with innovative products, portfolio margining and its technology, which offers “top-of-the-class speed and confirmation” according to one judge praising its straight-through-processing and real time confirmation services. In March, the CME announced its portfolio clearing service, which it claims will offer margin efficiencies of up to 85 percent. The following month, CME announced that it had cleared interest rate and credit default swaps with a notional value of $500m since launch and more than 1,800 buyside accounts had cleared through the service in the first quarter of 2012. During the year it has been building out its clearable products, launching new currencies and expanding its NDF services.
You can learn about all of our offerings online for CME Clearing.
Chicago Mercantile Exchange
CME Group won the vote of international brokers and FCMs as exchange of the year with the head of derivatives at one large bank saying the exchange group had “significantly alleviated concerns over the migration of OTC contracts onto exchange platforms” and another praising the company for “staying ahead of the game in a very challenging environment”. One broker said that the exchange had been very successful this year growing liquidity on their FX futures adding that “this trend may well continue with the move of OTC to Futures”. CME was also hailed for maximising distribution through the Globex platform and exchange partnerships and the launch of CME Direct. Also praised was the CME’s pioneering technology which made the exchange group “by far the leaders in the risk space, delivering what the industry has asked for”, including FIX drop copies, the Firmsoft GUI for cancelling trades and the Globex credit controls.
You can read more about the recent upgrades to CME Globex.
Dubai Mercantile Exchange
The Dubai Mercantile Exchange piped its Dubai rival, the Dubai Gold and Commodities Exchange, to the post in a tightly contested battle for Exchange of the Year Australasia and MEA. The exchange has spent the year setting new records on its flagship Oman Crude Oil contract and has taken great steps in the establishment of the contract as a new global benchmark. It has continued to win new clients and gained significant credibility among local refiners. However, the big development for the exchange during the year was February’s deal with the CME Group that saw the Chicago-headquartered exchange increase its stake to 50 percent while the Oman Investment Fund upped its stake to 29 percent marking a significant vote of confidence in the exchange and its aim of building out a global oil benchmark from the world’s largest exchange group.
The DME celebrated its five-year anniversary this year and produced this infographic.
BM&FBovespa, Puma Trading System
BM&F Bovespa takes home its second award for the implementation of the Puma trading platform for derivatives, which was completed in the final quarter of 2011. The CME Group and BM&F Bovespa jointly developed the Puma trading system. The system, which replaced the GTS matching engine in August of 2011, has been rolled out to replace the Mega Bolsa, Bovespa FIX and SISBEX systems, integrating all the exchange processes into a single multi-asset class system with high processing capacity and low latency. The new system is seen as a boon for high-frequency trading and arbitrage strategies and provides the Brazilian exchange with a world-class trading platform on which to further develop its business. The exchange is also in the process of merging its co-location facilities as part of the technology overhaul.
You can read our Q&A with BM&FBovespa’s CEO and learn more here about our strategic partnership.
Bursa Malaysia Derivatives clearing upgrade
Bursa Malaysia Derivatives is one of the world’s most exciting derivatives markets today. Since its 2009 deal with the CME Group, it has exploded onto the international scene and become one of the most talked about emerging markets. Bursa Malaysia launched its new clearing system, developed in conjunction with KRX, the Korean exchange, and CME Group in February and promised it would “pave the way for the introduction of new derivative futures and options products.” The new system incorporates real-time risk management and monitoring of participant exposure and uses Span margining to calculate margins. The upgrade also significantly increased the capacity of the exchange’s clearing services. Bursa Malaysia was also awarded the Highly Commended Derivatives Exchange of the Year in the FOW Awards for Asia in September.
You can read our Q&A with Bursa Malaysia’s CEO and learn about our commercial agreement based on cross investment, settlement price licensing of BMD Crude Palm Oil (FCPO) futures.
Another launch designed to capitalize on the transition of OTC products onto electronic platforms, Eris Exchange’s ambition cannot be doubted. The exchange futurised interest rate swaps and has designed a series of contracts that offer more standardised versions of complex OTC interest rate swaps. Eris was launched as a designated contract market in November 2011 and has steadily built up open interest in its 0-2 year interest rate futures contracts. Trading volumes on the exchange have not been overwhelming but the exchange has set up a platform that is both innovative and set to grow significantly once the Dodd-Frank rules come into force. One judge said that “Eris has taken the lead in doing what everyone else is going to be trying to do over the next few years and has a significant first mover advantage”.
Last week Eris announced lower margin requirements on its new interest rate swap futures contracts, which will be cleared by CME Clearing.
Allan Schoenberg is Executive Director of Corporate Communications at CME Group.
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