The London Stock Exchange (LSE) announced on Friday it is teaming up with the Chicago Board Options Exchange (CBOE) and several major brokerage firms to launch a new derivatives trading venture.
The joint venture, CurveGlobal Ltd., aims to make interest rate derivative trading cheaper and more efficient. The LSE and CBOE are being joined by major dealers, including Bank of America Merrill Lynch, Barclays, Citi, Goldman Sachs, J.P. Morgan and Société Générale. Additional shareholders are expected to join in the coming months.
Initially, the new venture will offer trading in certain short-term and long-term interest rate futures, with additional products to be added after the launch. The products will be admitted to trading on London Stock Exchange Derivatives Market, and cleared through LCH.Clearnet. Trading is slated to start in the second quarter of 2016, subject to regulatory approvals.
The goal of the new venture is to “provide a competitive offering in the interest rates futures market, delivering lower transaction costs,” the LSE says in a statement.
The LSE’s initial investment into the joint venture will be £9.5 million ($19 million), the exchange says, which represents about one third of the anticipated total funding capital requirements for the venture. The other players will provide another £20.5 million ($40.9 million). The LSE will initially own 31.67% of the new venture, with the other investors holding the rest; although the LSE says that it aims to reduce its stake to 25% through the addition of more shareholders.
“We have a proven track record of partnering with our customers to deliver open access solutions that provide greater choice to the market as a whole. CurveGlobal is an exciting and innovative initiative for our customers and one that complements the recently announced portfolio margining solution from LCH.Clearnet’s SwapClear business,” says Xavier Rolet, CEO of the London Stock Exchange Group, in a statement.