The CME Group said Monday it was in the process of applying to the UK's Financial Services Authority to establish a London-based derivatives exchange, which, subject to regulatory approval as a Recognized Investment Exchange, is expected to begin trading foreign exchange futures products from mid-2013.
"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," CME Group Chief Executive Officer Phupinder Gill said in a statement.
"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." The statement added Robert Ray, currently managing director for products and services, would become CEO of the newly established CME Europe.
The CME Group, the world's largest and most diverse derivatives marketplace, with global benchmarks across asset classes including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. The 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, and in May 2011 launched CME Clearing Europe, a London-based clearing house, to clear OTC transactions in commodity and financial derivative products.
"We continue to see an increase in business coming from our diverse set of customers in Europe, with more than 20% 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-US customer base." CME Clearing Europe will provide the central counterparty clearing services, with CME Globex used as the electronic trading platform.
