Five Minutes With Neal Wolkoff, ELX Futures, L.P.

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Five Minutes With Neal Wolkoff, Chief Executive Officer Of ELX Futures, L.P.


There was some excitement at the headquarters for ELX Futures L.P. over the weekend. The exchange - which was founded in 2007 and launched in 2009 and is backed by a consortium of founding partners comprising major global investment banks and market making firms - celebrated its second anniversary on July 9, 2011. Neal Wolkoff, chief executive officer of ELX, took few minutes this week to talk about the occasion and the outlook at the exchange at this juncture.

Q: There was an anniversary celebrated at ELX over the weekend. Could you tell me the significance of the occasion?

A: Our two-year anniversary was a big milestone. It cemented ELX’s place in the futures marketplace as a long-term competitor to the CME Group. I was personally very proud of my team and the partners behind ELX. We still have much more to accomplish, but the past two years of working hard to build an exchange from scratch has been remarkable and rewarding. We celebrated with an internal party for the staff. We take great pride in the anniversary.

Q: Is ELX where you had anticipated it would be at this juncture? Why or why not.

A: When we launched, I wanted ELX to be a competitive alternative that offered lowered fees, state-of-the-art technology and attractive services for our customers. I believe we achieved all of that.

Q: Which products have gained the most traction at the exchange thus far? Why do you think this is so?

A: U.S. Treasuries and Eurodollars both made their mark and we’re gaining market share and open interest. Do we want to launch new products? That’s a definite yes.

Q: Is the goal at this point to take the lead in terms of market share for benchmark products such as the 30-year and Eurodollars, or is there another goal? If there is another goal, what is the goal?

A: We would like to grow our market share on all our products, introduce new products and attract new customers and focus on gaining more institutional clients. I think ELX is moving in the right direction and it would take very little to move us a remarkable amount forward.

There are going to be great synergies in terms of OTC and derivatives that would result in greater participation. It would make the client base potentially larger and create opportunities for us.There has been unclear direction in the economy. Futures exchanges are important in strong economic times as well as weak.

Q: Which products are undergoing more development?

A: European interest rates are undergoing more development. They have not been introduced yet at ELX. Our goals for the rest of this year are to really create greater ties between ELX, our investors and the buy-side clients of our investors, and we think there are great opportunities for synergies in the clearing of these products with European products. We haven’t launched yet, but we have it thoroughly in our plans to roll this product out.

Q: ELX has touted the technology it offers its customers as superior. Why is it superior to other offerings out there?

A: We use eSpeed technology that has been proven to be faster and more efficient. We’re very happy that our technology platform has been solid and stable for the past two years and we are planning for even more advancements in our technology. The platform allows users to access cash and futures simultaneously – without having to deal with the latency of trading separate markets. Over time, some OTC products will end up trading and looking more exchange like. We certainly would want to be in the mix.

Q: What is your take on the current state of Dodd-Frank regulatory efforts? Do you anticipate any key changes in ELX's target areas?

A: Dodd-Frank won’t represent major change to exchanges and how we’ll be governed. We’re now fully regulated by the CFTC. It does impose some additional rules on products and the like. There will be more synergies in OTC futures, more opportunities for cost savings. I do think the market will want to have the kind of open access to clearing that Dodd-Frank promises.

Q: What can we expect in the future from ELX?

A: We plan to launch new products and new business initiatives to attract new customers.