London Stock Exchange Raises GBP20 Million for Derivatives Challenger Curve -Financial News
December 12 2019 - 10:53AM
Dow Jones News
By Samuel Agini
Of Financial News
London Stock Exchange Group PLC (LSE.LN) and a group of banks
have put another 20 million pounds ($26.3 million) into a
derivatives-trading venture they hope can challenge the dominant
forces in European interest-rate futures.
CurveGlobal has raised the money to provide working capital and
fund future growth, the LSE confirmed. It is CurveGlobal's first
funding round since February 2018, when it also raised GBP20
million.
The LSE, which owns around 43.4% of CurveGlobal, launched the
joint venture with a number of major banks and Chicago-based
exchange Cboe Global Markets Inc. (CBOE) in September 2016.
According to LSE data, roughly 5.6 million interest-rate
derivative contracts changed hands on CurveGlobal in the first 11
months of 2019--an 85% year-on-year increase despite weaker volumes
in October and November.
However, Curve is dwarfed by U.S.-headquartered Intercontinental
Exchange Inc.'s (ICE) ICE Futures Europe and Deutsche Boerse AG's
(DB1.XE) Eurex.
London-based ICE Futures Europe traded 489.4 million
interest-rate derivative contracts in the first 11 months of 2019,
while the figure for Eurex was just under 518.0 million, according
to their websites.
Andy Ross, chief executive of CurveGlobal, told Financial News:
"It would be churlish to say that when you're competing against
some of the biggest exchanges in the world that it isn't difficult.
I'm delighted by the number of people joining our market, buy-side
and sell-side."
Mr. Ross added that the majority of shareholders contributed to
the latest fundraising; partner banks on the project are Bank of
America, Barclays, BNP Paribas, Citigroup, Goldman Sachs, JPMorgan
and Societe Generale.
The LSE lacks a derivatives-trading operation with scale, having
lost out to Euronext N.V. (ENX.FR) in 2001 in a battle to acquire
Liffe, a London-based futures and options exchange. Liffe now sits
within U.S.-based ICE following a number of subsequent deals in the
exchange sector.
Now into its fourth year, CurveGlobal has sought to grow
activity on its market by introducing an "all you can eat" fee
model. Typically, exchanges charge commission on trades rather than
offering unlimited trading for a subscription fee. CurveGlobal
offers both options.
The platform also started with the promise of helping banks use
their capital more efficiently. Its contracts clear at LCH, the
LSE's majority-owned clearing house, which offers them access to a
single default fund across over-the-counter and listed trades.
Banks have been hit by tougher capital requirements since the
financial crisis, increasing the cost of trading.
Website: www.fnlondon.com
(END) Dow Jones Newswires
December 12, 2019 10:38 ET (15:38 GMT)
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