10.24.2013

Deutsche Börse Buys Stake in GMEX

10.24.2013
Terry Flanagan

Deutsche Börse has purchased of a minority stake in Global Markets Exchange Group International, a London based exchange business focused on the launch of a suite of new products, including original Interest Rate Swap Futures contracts, derivatives indices and emerging markets exchange business partnerships enabled by multi-asset trading technology.

With this step, Deutsche Börse is supporting innovation in new product concepts, some of which will enable institutions to reduce costs to both balance sheet and margining.

“This investment in GMEX Group highlights our focus on using innovation to support the integrity and safety of the financial markets,” said Andreas Preuss, deputy CEO of Deutsche Börse Group and CEO of Eurex. “The innovative business model provided by GMEX Group is the type of initiative the end users of the market want to see supported to achieve this objective. Further, this extends our positioning in new products, including unique Interest Rate Swap futures contracts and the development of new market exchange segments, for a broad range of market participants in existing and emerging markets.”

GMEX was created to target market opportunities brought about by changes to international regulation in developed markets and by growth and development in emerging market economies.

As a key market targeted to move to CCP based futures contracts, the IRS market has been the target of multiple attempts to launch futures contracts by the futures community. The GMEX approach is very different from IRS futures products so far launched, as it provides a much more accurate track of the real exposure to the changes in the curve than existing contracts.

The industry continues to adapt to meet the G20-led market reforms to reduce systemic risk by pushing some privately negotiated derivatives onto electronic trading venues and through central counterparty (“CCP”) clearing houses.

“The global regulatory landscape is evolving quickly and we intend to establish GMEX Group as one of the most agile and capable providers in the space,” said Hirander Misra, CEO of GMEX Group.

GMEX last month launched an interest rate swap futures contract on its London Derivatives Exchange (LDX) segment.

The product, called a Constant Maturity Future (“CMF”), has been designed to address the complications for hedging interest rates that have been associated with the standard quarterly (March, June, Sept, Dec) expiring futures contracts.

“We are immensely pleased with this investment from such a strategically important global exchange partner and view this as a clear endorsement of our vision and business model, whilst maintaining our independence,” Misra said of the Deutsche Borse investment. “We look forward to the broad input from Deutsche Börse Group, which can only serve to refine and improve the direction of our new exchange, to the benefit of financial derivatives traders and end users across the world.”

Related articles

  1. Second quarter volume was up 25% year-over-year.

  2. Portware Integrates Markit TCA

    Margin has increased by 30% in just two months, OpenGamma research shows.

  3. Trading Europe From ‘Across the Pond’

    Status grants clearing members clarity on the regulatory treatment of their exposures to OCC.

  4. This year's traded notional exceeded €100m compared to last year’s €20m.

  5. Clients can access UMBS TBA futures alongside U.S. Treasury and short-term interest rate contracts.