Next up in our Leaders in Trading 2023 Editors’ Choice Awards write up series, we bring you the shortlisted candidates for Outstanding Derivatives Exchange, showcasing exceptional performance in the derivatives exchange space.
Over the last year, these derivatives exchange groups have helped innovative the marketplace with a wide range of expansions in their respective product suites, increased access to new and existing derivatives, as well as various partnerships which have steered increased growth in this trading segment.
Among the key players in this competitive landscape, The TRADE has selected Cboe Europe Derivatives (CEDX), CME Group, Eurex and Euronext for the 2023 shortlist, following various individual achievements by these venues over the past year.
Cboe Europe Derivatives (CEDX)
CEDX, Cboe Global Markets’ two-year-old pan-European equity derivatives exchange, has continued to build momentum since its inception in 2021, with over 55,000 index derivatives contracts traded since its launch. Open interest peaked at over 2,000 in March earlier this year. This has led to the derivatives exchange making another appearance in this award category following last year’s nomination. In November last year, CEDX revealed plans to expand its product suite to include single stock options on leading European companies. The first phase of these new products have been confirmed to be available for trading from 6 November 2023, including options on over 130 companies from 12 European companies, and will be cleared by Cboe Clear Europe N.V. Several firms have recently confirmed their support of CEDX’s expansion into equity options, including: ABN AMRO Clearing, All Options, Barak Market Making B.V, Goldman Sachs, Morgan Stanley, Susquehanna International Securities. Interactive Brokers also confirmed it will connect to CEDX to trade the range of products offered by the exchange, including single stock products.
Elsewhere, CEDX and ION announced a new collaboration in August. As part of the agreement, ION provides direct access to CEDX via its cleared derivatives all-in-one automated trade workflow solution, XTP Execution, which offers Tier one banks and brokers integrated order management, connectivity and order execution. The direct trading connectivity means users of the ION solution will gain access to CEDX’s futures and options markets for single country and pan-European equity indices.
CME Group
Alongside its peers, CME Group is shortlisted for the 2023 Editors’ Choice Outstanding Derivatives Exchange. At the end of last year, CME Group and cryptocurrency benchmark indices provider CF Benchmarks launched three new decentralised finance (DeFi) reference rates and real-time indices, beginning 19 December 2022. The reference rates and real-time indices are calculated and published by CF Benchmarks on a daily basis. Elsewhere, in July, CME Group and The Depository Trust & Clearing Corporation (DTCC) enhanced their existing cross-margining arrangement to increase capital efficiencies for clearing members which trade and clear both US treasury securities and CME Group interest rate futures. The new expansion will allow eligible clearing members to gain increased margin efficiencies between US Treasury securities and CME Group interest rate futures, with changes expected to launch in January 2024. Since announcing the expansion, CME Group has received approvals from both the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) for their enhanced cross-margining arrangement.
CME Group also announced a restructuring of its foreign exchange businesses in August, seeking to expand trading opportunities and increase efficiency for its clients across futures, cash and OTC markets. CME Group combined its FX derivatives markets and its EBS cash markets business, with the combination set to be leveraged in a bid to increase efficiency, improve client service and enhance product development.
Eurex
Eurex is once again recognised in this award category after a nomination at Leaders in Trading 2023. Towards the end of last year, Eurex expanded its interest rate segment with the launch of three-month Euro STR futures referencing €STR. Eurex stated the launch is an important milestone in both the establishment of the €STR as the new benchmark risk-free rate, and in expanding the exchange’s EUR-denominated fixed income product offering. Eurex Frankfurt also partnered with Trading Technologies (TT) in February to offer the Eurex EnLight selective request-for-quote (RFQ) solution directly through the TT platform. According to the two firms, the partnership provides institutions of TT’s global distribution network the opportunity to streamline their RFQ and larger scale, complex trade execution activity on a single screen.
Eurex became the first exchange in Europe to offer Bitcoin index futures in April, with the new contract developed by Eurex in partnership with global index provider FTSE Russel and institutional-grade digital asset data provider Digital Asset Research (DAR). According to Eurex, institutional investors had been waiting for a contract based on a robust underlying index from an established index partner, which is supported by an AA-rated clearing house in Europe. The new futures are traded in EUR and USD, providing trusted access to cryptocurrencies in a regulated market through Eurex. The derivatives venue was also chosen by State Street and BNY Mellon to centrally clear European transactions in May and September, respectively. In the same month, Goldman Sachs became the latest sell-side institution to join Eurex’s listed FX futures business as a trading and clearing member which Eurex described as a “major milestone” in its ambition to become a listed FX liquidity hub in Europe.
Euronext
Rounding up our prestigious list of outstanding derivatives exchanges is Euronext. Euronext operates the second largest equity derivatives market in Europe in terms of number of contracts traded. The product scope covers derivatives on Euronext’s main local benchmarks and also a wide range of pan-European equity futures and options. Towards the end of 2022, Euronext made additional maturities up to ten years available on the total return future on the CAC 40 Index, addressing investor demands for more long-term capital efficiency. The listed solution allows clients to trade total return swaps with volumes continuously increasing. On 5 January 2023 the contract hit a milestone with one million lots traded, followed by two consecutive monthly volume records, with 79,792 contracts traded in January 2023 and then 84,449 lots traded in February. At the end of H1 this year, the TRF had traded almost 300,000 lots traded, representing €25bn of value, as much as in the full year 2022.
Euronext has also made advancements in the building of its fully-integrated clearing house, Euronext Clearing. All derivatives, including those on Euronext’s Italian markets, will be part of the same liquidity pool providing increased efficiencies to clients. This liquidity pool, together with the ability of Euronext to be more innovative, will scale up the derivatives franchise and make the segment more attractive to investors, the exchange told The TRADE. Elsewhere, in Q1, Euronext launched its new web-based Euronext Trader GUI to provide members with improved access to the derivatives market. Euronext Trader was developed in-house with technology acquired along with Borsa Italiana. Over €11.5bn of nominal value has been traded through Euronext Trader on the Amsterdam, Paris and Brussels marketplaces so far this year (as of 6 October 2023), with 416k contracts traded, including 125k index futures and 291k equity options.