NYSE Liffe US, a futures exchange of the NYSE Euronext Group which first started trading in 2008, has seen massive increase in customer participation and its now believed to be catching up with the CME Group. UBS analysts had an investor meeting with Thomas Callahan, CEO of NYSE Liffe US. Here’s the update:
- NYSE Liffe’s current client base includes major banks and some trading firms, and as expected to continue building its client base. Liffe US plans to launch options this year and will be filing for a rule change to improve its margins from client business but this is expected to take some time.
- Liffe US’s market quality is said to be approaching CME Group’s given that Liffe matched CME’s pricing 90% of the time. Management aims to reach 1 million contracts in open contracts which it hopes will win over sceptics. The exchange reached a crucial milestone in June this year, months after launching Eurodollar and U.S. Treasury futures on the exchange.
- The NYSE Liffe and New York Portfolio Clearing LLC (NYPC) initiative is more of a risk to CME, than a potential benefit to the NYSE Euronext. Investors should focus on CME’s core business because the Liffe US-NYPC initiative has created an an overhang, exposing shareholders to dilution by pushing stock-based compensation to key executives at the company.
- CME has proposed new offerings as a reaction to NYSE Euronext’s new entry. This includes the launch of the Financial Instruments Clearing Membership (FICM) and the upcoming launch Liffe’s signature contracts.