Nasdaq OMX has partnered with trading technology vendor SunGard to support connectivity and post-trade workflows for members of the exchange operator’s soon-to-be launched NLX European derivatives market.
NLX, which will initially offer trading in euro- and sterling-denominated short- and long-term interest rate derivatives following its planned Q1 2013 launch, will incorporate SunGard’s Stream Derivatives suite of solutions.
The tools include Stream Clearvision, which will support connectivity, allocations, give-ups, take-ups and split management, as well as Stream GMI and Stream Ubix, SunGard’s solutions for trade load and position keeping, valuation and reconciliations.
“Partnering with solutions providers that are readily accessible and familiar to our members is a key part of the NLX offering,” said NLX CEO Charlotte Crosswell. “SunGard’s post-trade solutions for derivatives provide a reliable, efficient and accurate means of managing the processing of NLX listed interest rate derivatives.”
Clearing of NLX trades will be conducted via Anglo-French central counterparty LCH.Clearnet’s Synapse derivatives clearing platform. LCH will clear NLX products using a value-at-risk based methodology, rather than the SPAN approach traditionally used by derivatives exchanges.
The venue aims to attract market share by offering users collateral efficiencies through the ability to cross-margin their short- and long-term exposures. The exchange will not charge membership or market data fees. Initial liquidity is expected to be provided both by electronic market makers and large sell-side firms looking to facilitate institutional client business.
On launch, NLX will compete primarily with Deutsche Börse owned Eurex and NYSE Euronext’s Liffe, which currently account for over 90% of listed derivatives trading in Europe. But it will also attempt to capitalise on regulatory change – specifically the European market infrastructure regulation and MiFID II – that will lead to the trading of OTC derivatives on exchange-like, centrally-cleared platforms.
Earlier this week, Nasdaq OMX unveiled a global index initiative with the rollout of 4,000 US dollar-denominated indices.