Nasdaq OMX NLX reinforces pricing proposition
New London derivatives market Nasdaq OMX NLX has partnered with technology specialist SuperDerivatives in a bid to ensure its pricing is as sound as possible, ahead of its looming battle to take business from its European derivatives rivals.
Nasdaq OMX NLX is a new multilateral trading facility for interest rate derivatives. Headed by chief executive Charlotte Crosswell, the venue is an attempt by Nasdaq to break into a market that has historically been dominated by European derivatives behemoths Eurex and NYSE Euronext’s Liffe.
The value proposition behind NLX is that it will offer a single platform for both short- and long-term listed interest rate derivatives. By focusing on both euro and sterling derivatives, the venue plans to unlock cost savings that will appeal to institutional investors – including lower execution and clearing fees.
Daily settlement prices and some final settlement prices for NLX futures will now be supported by SuperDerivatives, a company that specialises in cloud-based market data, derivatives trading technology and analytical tools. NLX will use settlement prices based both on actual traded prices and order books within the NLX market as well as the related OTC markets; the idea is that by combining both, customers can be sure they are getting the best price.
“Traditionally, exchange-traded derivatives have been settled based solely on trades within that exchange,” said Robert Emerson, head of interest rate derivatives at SuperDerivatives. “Given that liquidity in some areas of various products can sometimes be low, these settlement prices may be inconsistent and bear little relationship to the underlying markets. This partnership will draw data from both the OTC markets and the listed interest rate derivatives traded on the NLX market, and should offer NLX market participants a high level of confidence around settlement and margin.”
NLX launched at the end of May as a futures market offering 3-month EURIBOR, 3-month Sterling, Long Gilt, 2-year Schatz, 5-year Bobl and 10-year Bund. Using Nasdaq’s Genium INET trading platform, the venue claims to support simplified execution by bringing both central order book and non-order book trades onto the same platform. All products are cleared through LCH.Clearnet.