CME Group Inc. (CME), the world’s largest futures exchange, is pushing to expand its European business as it starts a new London-based market and IntercontinentalExchange Inc. (ICE:US) advances its planned purchase of NYSE Euronext.
Chicago-based CME, which is opening a new London exchange this year, is holding meetings in 12 cities including Milan, Lisbon, Madrid, Zurich and Stockholm, William Knottenbelt, who leads the operation in Europe, Middle East and Africa, said in an interview. The meetings for fund managers and traders are aimed at new and existing customers and will run over the next two months.
“There is sometimes a lack of awareness of how big CME is in the region,” Knottenbelt said. “A lot of regional banks are actually looking at what they can do in the region.” At the forums, CME discusses the different regulatory regimes in the U.S. and Europe, over-the-counter clearing and its new exchange, he said.
CME’s new London operation will compete with Deutsche Boerse AG (DB1)’s Eurex and Liffe, the largest derivatives venues in Europe. NYSE Euronext (NYX)’s London-based Liffe offers gilts, short- sterling and Euribor futures, while Frankfurt-based Eurex has contracts on German and French bonds. ICE announced plans to buy NYSE on Dec. 20. Nasdaq OMX Group Inc. (NDAQ:US) is also setting up a new European derivatives market called NLX.
Exchanges and brokers including CME are trying to win business and customers by capitalizing on regulations that will push over-the-counter products onto electronic systems. The world’s biggest exchanges, including CME, ICE and Deutsche Boerse, also have their own clearing houses, which operate central counterparties that stand in the middle of trades to guarantee they are completed.
Founded in the 19th century, CME’s business spans agricultural, energy, metal and financial futures. CME Europe is starting with currency derivatives as it seeks to attract volume. Interest-rate futures are CME’s biggest business.
“London is a huge market,” Knottenbelt said. “And there’s huge liquidity at the end of the Asian and European day that isn’t reflected in the U.S., so there’s an opportunity.”
CME approached Frankfurt-based Deutsche Boerse (DB1) at the end of last year to consider talks on a merger, four people familiar with the situation said in February. Deutsche Boerse, which had its takeover of NYSE Euronext (NYX:US) blocked by European regulators a year ago, is hesitant about entering discussions, the people said. Deutsche Boerse has said it’s not in merger talks.
Knottenbelt declined to comment. CME isn’t holding a meeting in Frankfurt.
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