Nasdaq NLX says 10 percent market share in key contract shows momentum growing

Fri Mar 21, 2014 2:15pm EDT
 
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By Clare Hutchison

LONDON (Reuters) - Nasdaq OMX's (NDAQ.O: Quote) new London-based derivatives exchange has achieved 10 percent market share in one of its contracts, a level of liquidity that will draw more market participants to connect, its chief executive said.

The nine-month old NLX exchange allows trading in a range of short- and long-term interest rate, euro and sterling-denominated derivative products on a single market. Clients can both trade and settle orders through the NLX platform.

It launched amid a drive by global regulators to push derivatives, which include commodities and other financial instruments, on to exchanges to improve transparency and lower risk. Derivatives have mainly been traded over the counter between banks and trading houses.

NLX's fees are lower than rivals - Deutsche Boerse's (DB1Gn.DE: Quote) Eurex, Europe's largest derivatives exchange which dominates long-term interest rate derivatives, and IntercontinentalExchange-owned NYSE Liffe (ICE.N: Quote), the second-largest and leader in shorter contracts.

Data compiled by NLX shows it has a 30-day moving average market share of 10 percent in Euribor, the world's second-largest short-term interest rate contract after Eurodollar, a level CEO Charlotte Crosswell said was psychologically important to prospective clients.

"Ten percent market share is a significant number. Because we are regularly doing that in one of the products that has impact ... that's why people are connecting, but then they will also support the whole rates curve," Crosswell told Reuters in an interview at Nasdaq's London office.

The number of clients on its roster has now risen from 16 to 27. These clients represent approximately 60 to 70 percent of the trading volume in the listed European rates contracts NLX offers, she said.

Its share of longer-term contracts, which include German government bond futures and long Gilt futures, remains at 2 to 3 percent and its overall market share across all products at 3 percent on a 30 day moving average, Crosswell said.   Continued...

 
CEO Charlotte Crosswell of NASDAQ OMX NLX poses after an interview with Reuters in London March 20, 2014. REUTERS/Luke MacGregor