(Bloomberg) — Trading in short-term interest-rate futures on Nasdaq OMX Group Inc.s NLX European exchange is increasing, reflecting market share gains while IntercontinentalExchange Group Inc. moves Liffe onto its platform.
Euribor futures averaged more than 100,000 contracts each day last week, the most since they started trading in June, according to data compiled by Bloomberg. That represented 20 percent of the trading that took place on the Liffe exchange for that contract, up from 4.9 percent the week before. A daily average of more than 40,000 short-sterling futures changed hands on NLX between Nov. 25 and Nov. 29, 13 percent of the trading on Liffe and a jump from 4.6 percent the previous week.
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The London-based NLX exchange, opened six months ago, competes against the largest futures markets in Europe: Liffe and Deutsche Boerse AGs Eurex. Liffe, owned byNYSEEuronext, is moving onto ICEs European platform. Liffe, which previously used a network provided by LCH.Clearnet Group Ltd., had dominated trading of Euribor and short-sterling futures.
Direct competition in the same region, time zone, and in like-for-like products is relatively new, said Bill Herder, executive director of the Futures Industry Association in Singapore. Traders have another venue to trade on. There is more liquidity for them to access. The Liffe transition is another reason for NLXs growth in this contract.
There were 71,534 Euribor futures outstanding on NLX and 54,435 short-sterling contracts, data compiled by Bloomberg show. That compared with 3.9 million Euribor futures and 3 million short-sterling contracts on Liffe.
Bobl, Schatz
NLX started its interest-rate derivatives platform with six products, including futures on Euribor, short sterling and the German bund. It also offers medium-term German-government debt known as Bobl; Schatz short-term German debt; and the Long Gilt, based on U.K. government bonds. London-based LCH is the clearinghouse for NLX, reducing the fallout from any default by guaranteeing counterparty payment.
Nasdaq Chief Executive Officer Robert Greifeld said in October 2012 that NLX would seek to reach a more than 10 percent market share in its first year of operation. On Oct. 23, he said NLX probably wouldnt achieve that goal across all its products, though it may for some contracts.
Growing Presence
Open interest for Bobl contracts was 1,313 on NLX, while there were 761 bund futures and 4,948 Schatz contracts, data compiled by Bloomberg show. That compared with more than 900,000 Bobl, bund and Schatz futures each on Eurex, according to the data. NLX had six Long Gilt contracts outstanding, compared with more than 388,000 on Liffe, the data show.
Nasdaq, the operator of Americas second-biggest equity exchange, announced plans for the U.K. platform in June last year. Customers who trade NYSEs Liffe derivatives contracts also had to switch to ICE. LCH is the worlds largest clearinghouse for interest-rate swaps.
We are here and open for business, Charlotte Crosswell, chief executive officer of NLX said in an interview. There are opportunities for us, especially around Liffe, which is in transition now. People want choice. NLX brings competition to European interest-rate derivatives.
James Dunseath, a spokesman for Liffe, declined to comment.
Deutsche Boerse andNYSEEuronext own Europes largest derivatives exchanges. London-based Liffe dominates the market for short-term interest-rate derivatives. Frankfurt-based Eurex, Europes largest futures exchange, handles long-term products.
