Swap futures platform GMEX has struck a deal with Eurex to list its products on the German futures exchange, with a view to go live in early April.
Through the agreement GMEX will utilise the Eurex’s execution and clearing arrangements, allowing buy-side firms to trade the product through their existing membership with the exchange.
Transactions will still be arranged through GMEX, however the rest of the trade will be subject to the same rulebook and clearing arrangements as Eurex’s own products.
The move will provide a major boost to participation in GMEX’s Euro-denominated Constant Maturity Future (CMF), and allows the new platform to circumvent the complications associated with setting up as a multilateral trading facility itself.
“If we were going for new venue approval it would take a year to get on bank’s work streams and now they can just roll us in with Eurex work they are doing,” said Hirander Misra, CEO of GMEX.
“Existing members can leverage their Eurex membership and we don’t have to be a MTF. Putting the Eurex wrapper around the product really accelerates the onboarding process.”
Misra added that the platform was receiving “very strong support from the trading community particularly the buy-side”.
GMEX’s flagship product is a swap future which tracks the interest rate exposure at each point on the yield curve by removing the expiry date and marking the contract to market against GMEX’s own Constant Maturity Index on a daily basis.
Swap futures have emerged as viable alternatives to OTC interest rate swaps which have become increasingly costly to trade due to global central clearing mandates.
The group is already partially owned by Deutsche Boerse, the parent company of Eurex, however the clearing and execution arrangement represents significant backing from the German exchange group.
GMEX has been granted regulatory approval from the UK Financial Conduct Authority (FCA), however the launch date for the swap futures contract is still subject to regulatory approval.