EUROPE’S second-largest equities market, Chi-X Europe, has begun trading centrally cleared contracts-for-difference (CFDs) for institutional investors.
The new service, which will operate as a joint initiative with European clearing house LCH.Clearnet, could serve to keep the exchange ahead of regulatory moves to make the over-the-counter derivatives market more transparent.
It aims to standardise the market for CFDs, which are often traded privately between brokers, making transactions invisible to the wider market.
European regulators hope to force CFDs through exchanges and clearing houses under new legislation planned for this year, which will bring in pan-European controls for over-the-counter derivatives from 2012.
The CFDs market was thought to be worth £1 trillion last year in the UK, according to the latest estimates by US research Tabb Group.
Chi-X post trade services manager Nathan Renyard said: “With any new market that we launch it’s always a soft launch and you have to bring in clients slowly. This is a world first, so there’s some sense of educating people and bringing clients on board.
“CFDs are an important market and we’re providing a service which we know the market needs.”