Turquoise Derivatives, the pan-European derivatives business of the cash equities multilateral trading facility (MTF) Turquoise, owned by the London Stock Exchange (LSE), will ”soft launch' in the first week of May, but hasn't yet secured the stock index licences needed for its planned full service offering.
Under this initial stage of the launch, the LSE's EDX market will move under the Turquoise Derivatives banner. At this point only existing EDX products – Nordic and Russian derivatives – will be traded on the platform. The second stage will involve Turquoise offering trading in pan-European single name and index futures and options, beginning with contracts based on the FTSE 100 index.
These are not expected to be launched until after a technology upgrade scheduled for 16 May 2011, but a truly pan-European business depends on licences to trade derivatives based on indices of and operated by rival venues.
“Where possible, we are looking to licence the same indices upon which Eurex and Liffe offer derivatives so we can compete with them directly,” said Natan Tiefenbrun, commercial director, Turquoise.
“We have been granted a licence for FTSE indices, and are looking to secure licences from other providers,” he continued. “If we are unable to secure certain licences, we will still offer alternative products. However, we believe the market and our customers would be better served if we were able to secure licences and offer trading in the same products as the existing derivatives exchanges in Europe.”
The Eurostoxx 50 index which covers a spread of 50 European blue chip stocks is owned by exchange operators SIX Group and Deutsche Börse, which also owns the German DAX index. The CAC 40 which represents French blue chips is owned by NYSE Euronext, the transatlantic market operator, which plans to merge with Deutsche Börse.
Turquoise Derivatives will use EDX's existing SOLA platform technology and will upgrade to SOLA 2.1 on 16 May. The system was built by Canadian exchange operator TMX Group, which the LSE intends to merge with, in a deal that would create a £3.4 billion exchange group.
EDX customers will gain immediate access to the new Turquoise Derivatives platform through their existing connections, and the new venue will also use the current EDX clearing infrastructure via central counterparty LCH.Clearnet.
Trading technology supplier FFastFill has said it will support trading of the planned new products from its front-office execution applications including TradingPro and FIX trading software, straight through to its middle-office matching and allocation suite, SEALS, and Eclipse, its cross-asset clearing and settlement application.
Turquoise Derivatives products will also be available to non-LSE and non-Turquoise members via FFastFill's Horizon multi-broker trading solution, enabling companies without direct membership to the London exchange to access these products, and over sixty other trading venues on the FFastFill network.