CME traditionally partners with local exchanges, such as the Korean Exchange, rather then operating its own subsidiaries however with the UK being one of the world’s largest financial centers it probably made more sense for the CME to operate there on its own. This however can prove to be tricky as the FSA hasn’t granted a new exchange license for over 5 years.
CME Group, the world’s leading and most diverse derivatives marketplace, announced today it is in the process of applying to the United Kingdom’s Financial Services Authority (FSA) to create a London-based derivatives exchange. Pending regulatory approval as a Recognized Investment Exchange, CME Europe Ltd will initially begin trading foreign exchange futures products and is expected to launch mid-2013.
“We continue to see an increase in business coming from our diverse set of customers in Europe, with more than 20 percent of our volume now originating from the region,” said CME Group Executive Chairman and President Terry Duffy. “Having an exchange in London that can leverage the central counterparty model of CME Clearing Europe will allow us to align ourselves even more closely with our regional customers in both listed futures and over-the-counter markets, and provide additional opportunities to our expanding non-U.S. customer base.”
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“Our application to establish an exchange in Europe fits within our strategy to grow organically and is an important next step to meet the growing regional demand from our customers,” said CME Group Chief Executive Officer Phupinder Gill. “Launching with a suite of FX products allows us to leverage our 40 years of experience in FX futures for customers in the region who access the futures market during the London business day, but we also plan to look at expanding into additional asset classes.”
Robert Ray, currently Managing Director, Products and Services, will become Chief Executive Officer of CME Europe. CME Globex will be used as the electronic trading platform and CME Clearing Europe Ltd, which launched in May 2011, will provide central counterparty clearing services.
As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the world’s leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.
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