A new multilateral trading facility (MTF) seeking regulatory approval in Europe will meet buy-side needs for OTC derivatives trading, according to its founder and former Chi-X Europe executive, Hirander Misra.
Speaking to the TRADEnews.com, Misra said the new platform would operate under the banner of the Global Markets Exchange Group (GMEX), and would address cost challenges related to new global OTC derivatives rules.
“We’re focusing on a range of instruments, effectively OTC derivatives moving on exchange with new regulations, with a focus on fixed income and currencies,” he said.
Misra wouldn’t speculate about which instruments will feature, but said the platform would not trade physical interest rate swaps, but instead focus on actual derivatives products. He said the firm had applied to the UK regulator the Financial Conduct Authority for authorisation as an MTF.
He said the platform would not compete with any established player and would avoid the European equities space, which has continued to attracted new alternative venues since MiFID’s 2007 inception. Instead, the platform seeks to address G-20-inspired rules on OTC derivatives that will increase costs for market participants across trading, clearing and collateral management.
“The focus now is on balance sheet efficiencies and effectively finding a better way to trade OTC derivatives, driven by regulation and cost,” he said.
“We’ve come up with some unique products that aren’t traded on any other market, to address this need. It’s something new and different and there’s nothing we’re doing that relates to what is out there already.”
The European market infrastructure regulation will require OTC derivatives trades to pass through central counterparties in order to reduce systemic risk that led to the 2008 financial crisis.
Misra, who co-founded the Chi-X Europe exchange, will be CEO of GMEX Group, with Vj Angelo, who has experience in fixed income OTC markets, named as president and managing director. Former head of sales for TrayPort, James Davies, will take on the role of COO.
Misra said more details would emerge next month, with details of which products will be included for trading and said initial discussions with buy-side firms had proven very positive.
“Given the efficiencies around capital and better use of collateral it’s very attractive to the buy-side,” he said.