THE LONDON Stock Exchange (LSE) is to launch a new pan-European derivatives trading platform in a bid to crack the dominance of rivals NYSE Euronext and Deutsche Boerse.
The European futures market has traditionally been dominated by the New York and Frankfurt-based exchanges, which announced plans to merge earlier this month.
Yet the LSE yesterday revealed it would launch a rival trading venue, named Turquoise Derivatives, as early as June this year.
Based on technology provided by TMX Group, the Canadian exchange it plans to merge with, the new business will allow institutional investors and hedge funds to trade across Europe.
The platform, developed aside from the merger deal, will offer the trading of futures and options contracts on companies.
Trading of LSE derivatives would take place on Turquoise Derivatives, formed through the acquisition by Turquoise – the LSE’s existing pan-European equities trading platform, operated with 12 shareholder banks – of a 19.9 per cent stake in the LSE’s existing EDX derivatives platform held by TMX Group, operator of the Toronto and Montreal bourses.
EDX London already uses TMX’s Sola trading technology, which will be used on the platform.
Europe’s largest clearing house LCH.Clearnet will operate as clearer, despite LSE owning a clearing facility operated by Borsa Italiana – the Italian exchange it bought in 2007.
Chief executive of Turquoise David Lester said: “Turquoise Derivatives, combined with the proven operating and clearing model already enjoyed by EDX customers, will be the start of the process that turns the sector on its head.”
In a separate development, the Chicago Board Options Exchange (CBOD) became the latest market operator to join a global frenzy of boerse mergers. Chief executive William Brodsky said yesterday CBOD’s focus on equity derivatives had kept it competitive against larger rivals, but said remaining a niche player “may not be the only way that we will succeed.”
His comments leave the door open to joining the consolidation wave that has swept the industry.