GMEX and Eurex Launching Interest Rate Swap Futures in August

The impetus behind the cooperation will focus on streamlining the electronic arranging of CMF contracts on GMEX’s comprehensive platform.

Global Markets Exchange Group Limited (GMEX) is slated to begin a provision of a new euro-denominated innovative IRS Constant Maturity Future (CMF) for both trading and clearing on Eurex’s platforms on August 7, 2015, according to a Eurex statement.

Both GMEX and Eurex agreed to embark on the cooperation back in the end of 2014, having since manifested itself ahead of the launch. The impetus behind the cooperation will help focus on streamlining the electronic arranging of CMF contracts on GMEX’s comprehensive platform, leaving trade confirmations and central clearing obligations being handled at Eurex.

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GMEX’s CMF is based on the Interest Rate Swap Index Average (IRSIA), which accurately tracks interest rate exposure at fundamental points on the yield curve by controlling for expiry date and marking the contract to market against an IRSIA Constant Maturity Index on a daily basis.

In a bid to help facilitate a smooth launch, a number of key software vendors will provide services from the service’s inception. Furthermore, Eurex Exchange participants will be allowed to trade and clear the GMEX IRS CMF under their current membership arrangements. This is hardly surprisingly given that market participants have had access to Eurex’s trading and clearing simulation environment since April 2015.

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The market launch itself on August 7 will see a broad spectrum of active participants from Eurex’s existing trading and clearing member base – this includes such entities as sell-side banks, buy-side firms, futures trading houses and derivatives brokers, including R.J. O’Brien Limited.

According to David Mudie, CEO of R.J. O’Brien Limited, in a recent statement on the upcoming launch, “We are delighted to be among the first to offer execution and clearing services for the GMEX CMF contracts at launch. We’ve seen strong client demand for access to this product from day one.”

“The regulatory reforms have spurred market demand for our contract as it brings the benefits of futures trading closer to OTC products, while delivering the efficiencies of centralised order execution, standardised central clearing and effective hedging of interest rate exposure. Launching an innovative product is very much a process, not an event, with momentum continuing to build beyond the initial go-live date,” noted Hirander Misra, CEO and Co-Founder of GMEX Group, in an accompanying statement.

“Offering this highly innovative contract to our market participants further increases the range of interest rate derivatives they can trade and clear. Users will immediately benefit from the capital efficiencies we can offer as our interest rate product suite comprises both listed and OTC instruments covering the entire euro-denominated yield curve,” added Brendan Bradley, Chief Innovation Officer and member of the Eurex Executive Board.

Eurex recently made headlines last week, having reported its average daily volume (ADV) during May 2015, which yielded 11.0 million contracts, constituting a jump of 8.9% MoM from 10.1 million contracts in May 2015.

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