ELX Futures, L.P.
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| ELX Futures, L.P. | |
| |
| Founded | 2007 |
|---|---|
| Headquarters | New York, NY |
| Key People | Neal Wolkoff, CEO |
| Web site | www.elxfutures.com |
ELX Futures, L.P. (ELX Futures) is a new fully-electronic futures exchange founded in 2007 and launched in 2009. It is backed by a consortium of founding partners comprising leading global investment banks and market making firms.[1][2][3] The financial press have called the exchange a challenge to the pre-eminence of the CME Group because it is directly competing against one of CME's premier products in offering futures on U.S. Treasuries.[4]
ELX Futures began trading U.S. Treasury futures contracts July 10, 2009, trading more than 18,000 contracts.[5]
The exchange was built on BGC Partners’ eSpeed electronic trading platform. Current users of the eSpeed application will have direct access to futures trading on ELX. Clearing services for ELX will be provided by the Options Clearing Corporation (OCC).[6]
In March of 2008, ELX announced it had launched an independent software vendor (ISV) program to support access to the exchange by a wide range of market participants.[7] Realtime Systems Group (RTS) was announced as ELX's first ISV partner.[8] On July 7, 2009, ELX Futures announced a partnership with MF Global Ltd, which will become an exchange Participant and offer FCM services.[9]
In July of 2008, ELX announced it had signed an agreement to have the National Futures Association provide market surveillance and oversight.[10][11]
ELX Futures handled over 17,000 contracts on its first day, challenging incumbent CME Group Inc. in the trading of Treasury futures.[12]
In fall of 2009, Dow Jones Newswires said ELX chief executive Neal Wolkoff said in an interview that ELX executives contended that a partnership between NYSE Euronext and the Depository Trust and Clearing Corp. was unfairly excluding competitors.[13]
On January 11, 2010, ELX launched trading in ultra-long interest-rate bonds. The new ultra bond futures require deliveries of maturities 25 years and longer, meaning that the new contract will more closely track the price of longer bonds. The contracts compete with similar contracts launched by the CME Group at the same time.[14]
Contents |
Background
The venture was first announced on Dec. 21, 2007 and the Commodity Futures Trading Commission (CFTC) approved ELX's application to become a Designated Contract Market on May 27, 2009. [1]
"ELX Futures" is the formal and most recent name for the exchange; it had several previous working and informal titles, including Four Seasons, the ESX and the Electronic Liquidity Exchange. The founding partners include Bank of America-Merrill Lynch, Breakwater, Citigroup, JP Morgan Chase,BCG Partners Inc., Deutsche Bank A.G., Barclays PLC, Credit Suisse Group, Getco, Peak6, Royal Bank of Scotland PLC.[2] and Goldman Sachs, who ELX announced on June 1, 2009 would join as a founding partner.[3]
On Oct. 29, 2008, Citadel, a founding partner, said it would pull its board member from ELX, according to a source close to the matter. Citadel said it would retain an equity stake and would use the still-to-be launched ELX platform, which aimed to challenge the CME's dominance in Treasury futures. However, the firm planned to focus on the credit-default swap trading and clearing platform being developed with CME. [4]
The backers of ELX have steered clear on identifying the CME Group as a direct competitor, though efforts to start a lower-cost platform highlight the concerns expressed by users during the CME’s takeover battle for the Chicago Board of Trade. Banks, mindful of CME Group’s push into the OTC market, suggested the enlarged CME would have monopoly pricing power, a charge denied by the CME.[5]
The absence of such pricing power and the potential for market entry were cited by the U.S. Department of Justice in its approval for the CME-CBOT merger.[6]
The new exchange marks the latest effort to challenge the Chicago exchange complex, following unsuccessful efforts by Cantor Exchange - a joint venture between the New York Board of Trade and eSpeed’s owner, specialist trading group Cantor Fitzgerald in 1999 - BrokerTec Futures Exchange in 2001 and Eurex US in 2004. The latter has since been restructured as the US Futures Exchange.
Eurodollar futures contracts - a stronghold of the CME - are reportedly among the products being considered.[7]
People
Neal Wolkoff was named CEO of the ELX on Oct. 6, 2008.[8]
Connecting ISVs
ISVs that connect to ELX include: BCG Partners, Broadway Technology, CQG, FFastFill, First Derivatives, Inforalgo Infomation Technologies, Orc Software, Progress Opama, RTS Realtime Systems, Trading Screen, and ULLINK[9]
References
- ↑ ELX FUTURES RECEIVES CFTC APPROVAL TO BECOME A DESIGNATED CONTRACT MARKET. ELX. Retrieved on May 27, 2009.
- ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
- ↑ Goldman Joins Startup Exchange ELX. Crain's Chicago Business. Retrieved on June 1, 2009.
- ↑ Citadel Drops ELX Board Seat; Will Remain User. Morningstar. Retrieved on October 29, 2008.
- ↑ CME relaxed about relations with Wall St. Financial Times. Retrieved on January 18, 2008.
- ↑ Opponents of all-Chicago deal find case has backfired. Financial Times. Retrieved on January 18, 2008.
- ↑ ICE - Four Seasons in talks. FOWeek. Retrieved on February 14, 2008.
- ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
- ↑ ISV Program. ELX. Retrieved on May 27, 2009.
