ELX Futures, L.P.

From MarketsWiki

ELX Futures, L.P. (ELX Futures)
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 backed by a consortium of founding partners comprising leading financial institutions. It is set to launch July 10, 2009.^{[1] [2][3]} "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 Commodity Futures Trading Commission (CFTC) approved ELX's application to become a Designated Contract Market on May 27, 2009. ^[4] ELX plans to offer futures on U.S. Treasuries.^[5] The venture, first announced on Dec. 21, 2007, challenges the pre-eminence of the CME Group, the leader in U.S. futures trading. Clearing services for ELX will be provided by the Options Clearing Corporation (OCC).^[6]

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.^[7] and Goldman Sachs, who ELX announced on June 1, 2009 would join as a founding partner.^[8]

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.^[9] Realtime Systems Group (RTS) was announced as ELX's first ISV partner.^[10]

A few months later, in July of 2008, ELX announced it had signed an agreement to have the National Futures Association provide market surveillance and oversight.^[11][12]

Contents 1 People 2 Background 3 Connecting ISVs 4 References

People

Neal Wolkoff was named CEO of the ELX on Oct. 6, 2008.^[13]

Background

ELX will use the proven technology of the BGC Partners’ eSpeed technology platform and BGC will take a 25 percent stake.

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. ^[14]

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.^[15]

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.^[16]

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.^[17]

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^[18]

References

1. ↑ ELX. exchange-handbook.co.uk. Retrieved on June 18, 2009.
2. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
3. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
4. ↑ ELX FUTURES RECEIVES CFTC APPROVAL TO BECOME A DESIGNATED CONTRACT MARKET. ELX. Retrieved on May 27, 2009.
5. ↑ CME rival ELX set to launch, but bad blood could mar debut. Crain's Chicago Business. Retrieved on May 27, 2009.
6. ↑ Our Company. ELX Futures, L.P.. Retrieved on May 27, 2009.
7. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
8. ↑ Goldman Joins Startup Exchange ELX. Crain's Chicago Business. Retrieved on June 1, 2009.
9. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
10. ↑ Press Release. ELX. Retrieved on April 29, 2009.
11. ↑ CME rival ELX contracts for oversight. The Chicago Tribune. Retrieved on July 22, 2008.
12. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
13. ↑ Press Release. ELX Futures. Retrieved on April 29, 2009.
14. ↑ Citadel Drops ELX Board Seat; Will Remain User. Morningstar. Retrieved on October 29, 2008.
15. ↑ CME relaxed about relations with Wall St. Financial Times. Retrieved on January 18, 2008.
16. ↑ Opponents of all-Chicago deal find case has backfired. Financial Times. Retrieved on January 18, 2008.
17. ↑ ICE - Four Seasons in talks. FOWeek. Retrieved on February 14, 2008.
18. ↑ ISV Program. ELX. Retrieved on May 27, 2009.