Futures Exchanges Get Connected

Terry Flanagan

Connectivity to regional exchanges figures prominently in the commodities and futures trading sector, with investors demanding cross-border capabilities with increasing frequency.

Trading Technologies, a provider of high-performance trading software for derivatives, has built connections to some three dozen exchanges via TTNet, its global trading network, the latest being the Mexican Derivatives Exchange (MexDer).

TT has linked its X_TRADER derivatives trading platform to MexDer via the CME Group’s Globex platform. TT’s connection launched concurrently with CME’s iLink enhancements for MexDer via Globex, which were released on April 14.

“MexDer partnered with CME to do two-way routing, similar to what CME did for Brazil {BM&F Bovespa],” said Jeff Mezger, group product manager and head of market connectivity and research at Trading Technologies. “Via this connection, U.S. traders can access to financial futures listed on MexDer, such as the peso-U.S. dollar future, which is one of the most liquid FX futures contracts.”

Mezger, who oversees the development for TT’s existing connections to more than 35 exchanges, played a key role in TT’s entry into new markets in Brazil and Japan by spearheading product development for TT’s connectivity to the Tokyo Commodity Exchange (TOCOM) in 2009, the Osaka Securities Exchange (OSE) and Tokyo Financial Exchange (TFX) in 2010, and the Tokyo Stock Exchange (TSE), BM&FBOVESPA in 2011 and MexDer in 2013.

“We’re now at three dozen with the addition of MexDer, mostly futures but also cash trading platforms,” said Mezger.

TT’s new link to MexDer allows TT’s X_TRADER and API users to trade the main derivatives contracts listed on MexDer, including currencies, equity index, and interest rate futures.

“This announcement is a very important step for our exchange. TT’s link to MexDer through CME Globex will open new business opportunities from north to south and worldwide routing,” said Jorge Alegria, MexDer’s CEO, in a statement. “The Mexican derivatives market is becoming a very interesting place for global investors that are also looking to trade the global derivatives markets. TT customers will find in our market a friendly legal framework, free convertibility, no withholding taxes for foreigners trading Mexico and a benefit from posting collateral in the U.S.”

MexDer also is accessible through TT’s MultiBroker service, which will enable clients to enter orders from its X_Trader platform and route them to any of its participating brokers through a direct market access network.

MultiBroker will allow traders to choose between brokers when routing orders directly to the world’s major futures exchanges through TTNet. Eleven major sell-side banks are participating in the beta program.

Later in 2013, Trading Technologies also plans to offer a gateway to Eris Exchange, the U.S.-based futures exchange, through which it will connect its trading software to the Eris SwapBook electronic trading platform.

Eris Exchange, which functions as a designated contract market, provides forward starting interest rate swap futures that are cleared by CME Clearing and traded on Eris SwapBook and Eris BlockBox.

“As Dodd-Frank Act clearing mandates go into effect, it will be interesting to see where previously OTC swaps volume ends up,” said Mezger. “The Eris model fits in well with the trend toward futurization of swaps.”

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