CME plans new London exchange

Tim Wallace
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LONDON could soon be hosting another derivatives exchange, as reports over the weekend suggested CME Group is planning to open a new European market based in the City.

The addition of a competitor to take on the London-based NYSE Euronext’s Liffe and Deutsche Bourse’s Eurex in Frankfurt could be a major step in shaking up the structure of the industry – no new licence to operate an exchange has been granted by the FSA for more than five years.

Indeed, the authorities were already concerned about a lack of competition in the market with the European Commission earlier this year blocking a bid to merge the Liffe and Eurex.

The authorities complained such a move would lead to a near-monopoly in the market in Europe, a ruling which Deutsche Bourse is challenging.

US industry leader CME has made previous attempts to expand its European business, but its bid to buy the London Metals Exchange was rejected in May of this year.

The group dominates derivatives trading in the US via the Chicago Mercantile Exchange, as well as having an expanding Asian business.

Its business in Europe largely comprises of CME Clearing Europe.

CME declined to comment on the plans for a new derivatives exchange.

More details are expected to emerge this week as the US industry leader comes to the conclusion of several years’ planning for the new entrant in the sector.