TRADING VENUES

CME Europe to cease trading by summers end

CME Europe failed to win volumes, with traders preferring to access liquidity at its US exchanges instead.

By Joe Parsons joe.parsons@strategic-i.com May 19, 2017 1:55 PM GMT

CME Europe will end trading of its FX and energy derivatives at the end of August, following the announcement it will shut down the London-based exchange by the end of this year.

CME Group said in a notice that the last day for trading all contracts listed on CME Europe will be 30 August. It will also shut down its clearing house, CME Clearing Europe, by the end of the year.

CME announced it will close CME Europe back in April following stagnant volumes at the exchange. Rather than attracting European traders to the exchange, traders were more willing to access its US exchanges instead, with average volumes of more than 2.6 million contracts per day from European clients last year.

William Knottenbelt, CME Group’s senior managing director, international, stated in April: “customers have shown that they prefer to access our global products, deep liquidity and greater capital efficiencies through our US infrastructure.”

The announcement of the closure follows similar moves by other ventures that sought to break the hold of the incumbent derivatives exchanges. Nasdaq NLX, the London-based interest rate futures exchange, shut down in April after failing to dent the hold of ICE and Eurex, as did Amsterdam-based The Order Machine (TOM).

Neil Crammond, director of risk management at Avem Capital, wrote in a recent blog how both NLX and CME Europe’s failure was down to its decision to mimic the contracts of the larger exchanges.

“Their [CME and NLX] failing was that they decided to copy European exchanges and as a result, both closed as zero volume. One would have expected them to follow a China/Euro bond or Brexit index, however they chose the sand cheese and tomato sandwich route and failed to provide any new contracts,” he wrote on financial publication Finance Magnates.