US-based buy-side firms will now be able to access interest rate swap futures listed on the Global Markets Exchange Group (GMEX) following regulatory approval.
The green light from the Commodity Futures Trading Commission (CFTC) is a huge boost to the start-up venue which has been tapping into Europe’s buy-side for some time.
“One duration hedging fund with $300mn AUM told us they had looked at other swap futures but had not used them as they did not provide a proper hedge,” Hirander Misra, CEO of GMEX told theTRADEnews.com.
GMEX’s product is a constant maturity future, which Misra believes resembles an OTC product much closer than other listed alternatives. Buy-side firms are continuing to look at listed derivatives as an alternative to trading swaps, which have become increasingly expensive due to new central clearing rules. Clearing requirements have already been enforced in the US, while Europe still awaits its own implementation.
“With the CFTC approval, we can further expand by offering our IRS CMF to US-based firms,” added Misra. “This is an important part of our growth strategy as it enables a wider range of buy- and sell-side participants to gain access to our innovative products to facilitate effective hedging of their interest rate exposure.”
US buy-siders will be able to execute and clear through their futures commission merchant (FCM) relationship in the US, who would then run through an omnibus account arrangement with their European entity which is a member of either GMEX or Eurex Exchange.
GMEX’s contracts are executed on Deutsche Borse’s Eurex Exchange and cleared through the German group’s clearing house.