CME Group is set to launch a new functionality – named Treasury Link – in Q4 of this year.
Mike Dennis
The move is an industry-first and is set to connect the world’s largest US Treasury futures and cash liquidity pools.
Specifically, the new offering will enhance US Treasury spread trading between cash and futures markets and is aimed at making interest rate trading more efficient for CME Group global users.
Speaking about the functionality, Jamie Mortimore, global head rates e-trading at Citi, said: “As a leading liquidity provider in US Treasuries, we welcome initiatives that bring greater execution efficiency and transparency to the market. Treasury Link will complement our existing capabilities, helping us to manage risk more effectively and improve the liquidity we can extend to our global client base.”
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Treasury Link will facilitate transparent and centralised spread trading between CBOT Treasury futures and BrokerTec cash Treasuries onCME Globex.
Through the offering, users will be able to transact the differential between futures and cash markets via a single submission.
According to CME, this is set to eliminate legging risk and allow clients to manage their exposure via a single spread.
“Treasury Link will connect the cash and futures markets in a way that wasn’t possible before – delivering faster, more efficient execution to market participants and unlocking new spread trading opportunities across fixed income,” explained Mike Dennis, global head of fixed income at CME Group.
“This functionality offers improved execution performance, pairing with CME Group Capital efficiencies which total $27 billion across cash, futures and swaps.”
The launch is currently pending regulatory review.