CME to close European exchange and CCP by end of 2017 Trade

CME Group has decided to close its London-based exchange and clearing house by the year-end, marking the latest derivatives venture to shut down its operations.

CME stated it intends to close its FX and energy exchange CME Europe, as well as CME Clearing Europe, which clears interest rate swaps and listed derivatives.

"While Europe continues to be a critically important and expanding market for CME Group, with average volumes of more than 2.6 million contracts per day from European clients during 2016, our customers have shown that they prefer to access our global products, deep liquidity and greater capital efficiencies through our U.S. infrastructure," said William Knottenbelt, senior managing director, International, CME Group.

According to reports CME Europe, which was launched in 2014 as a competitor to ICE Futures Europe, had been under review by the global exchange group.

Meanwhile CME Clearing Europe has found it difficult to break the dominant hold of LCH and Eurex in the swaps clearing market.  

It is the first major decision from CME Group’s new CEO and current chairman, Terry Duffy, who took on the expanded role at the end of last year.

With the closing of CME Europe, it marks the latest venture to shut down after Nasdaq NLX, the interest rate futures exchange, announced it will close its operations by the end of April.

CME Group said it remains committed to Europe and “will continue to maintain a significant operation in London to execute our global growth strategy, including serving our European client base,” Knottenbelt added.


SIX Group eyes assets of banks exiting payments business

SIX Group wants to expand its payments business by buying the assets of banks looking to exit the market, the chief executive of the Swiss financial services company has said.

SIX, whose assets include the Swiss stock exchange operator, hopes to pick up businesses that process credit card deals between retailers and banks. It would also like to buy a payments company, Urs Rüegsegger, SIX’s chief executive, told the Financial Times.

“We consider M&A as an essential part of the execution of our strategy,” Mr Rüegsegger said. “There are not that many opportunities on the trading side . . . but there are a lot of opportunities in the payment area.”

Its focus reflects the shift away from markets and trading as the main driver of the company’s earnings in recent years. Low volatility and competition have eroded profits related to equities and derivatives trading. Its annual results at the start of March underlined that payments comprised SIX’s biggest and most profitable subsidiary.

The group operates most of Switzerland’s financial markets infrastructure but has built up its SFr1bn ($996m) cash pile largely by selling in-demand assets. Over the past few years it has divested to Germany’s Deutsche Börse both of its 50 per cent stakes in Stoxx, which calculates some of Europe’s most heavily traded equity indices, and Eurex, the derivatives exchange.

SIX, which is owned by a consortium of banks, acknowledges it could also raise debt to finance a purchase. Mr Rüegsegger said German payments company Concardis, which was bought by Bain Capital and Advent, was “very attractive”. There is a second big German payments company which SIX is considering but which is unlikely to come on to the market as it is owned by local Sparkassen banks.

“I don’t think that at the moment any of the other bigger players are for sale . . . that can change very rapidly,” Mr Rüegsegger said. He said he believes that many banks are “reconsidering their strategy” for merchant acquiring businesses, since their technology is at the end of its life cycle and would require heavy investment.

SIX sees opportunity to either acquire those businesses or offer processing services to the banks.

“Our balance sheet is very solid,” Mr Rüegsegger said, adding that SIX is “very carefully looking at” potential targets.

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He also revealed that German regulator BaFin has submitted an application to the European Commission that will recognise Swiss legislation as equivalent to the EU.

SIX was one of the first financial groups to publicly acknowledge that it would no longer be able to access the single market through the UK after Brexit, as reported by the FT in September.

It has called the equivalence ruling “vital” to maintain the importance of Switzerland as a trading venue in Europe. The EU must recognise Swiss financial market regulation as equivalent by the end of the year so EU-based banks, brokers and high-frequency traders can continue to trade on the Swiss stock exchange, it has warned.

* This article has been amended since original publication to correct the spelling of Concardis and to clarify that it was bought by Bain Capital and Advent

Advertisers dump Fox host after harassment allegations

Major advertisers have begun cancelling spots on America's most-watched cable news show following reports of sexual harassment involving the star Fox News host Bill O'Reilly.

US insurer Allstate and French pharmaceutical maker Sanofi (LSE: 0O59.L - news) became the latest to exit on Tuesday, following the lead of a handful of auto brands dropping ads for Fox's "The O'Reilly Factor," a favorite among conservatives.

Allstate spokesman Justin Herndon said, "Inclusivity and support for women are important Allstate values. We are concerned about the issues surrounding the program and we have suspended our advertising."

A Sanofi statement said the group had "reallocated" its ads.

"The controversy around 'The O'Reilly Factor' program and allegations made against Bill O'Reilly are matters that we take seriously and will continue to monitor," Sanofi said.

The moves came after a New York Times report said the cable news giant and O'Reilly had paid five women a total of $13 million in the cases spanning 15 years, in exchange for their silence and agreement not to pursue litigation against Fox News, a favorite among conservatives.

While two of the cases were previously known, the Times said it had unearthed three more cases of harassment, two of a sexual nature and one alleging verbally abusive behavior by O'Reilly.

Companies previously dropping advertising included BMW North America, Hyundai and Mercedes (Xetra: 710000 - news) -Benz.

"While it's hard to tell what the facts are, the allegations are disturbing," Mercedes-Benz spokeswoman Donna Boland said.

"Given the importance of women in every aspect of our business, we don't feel this is a good environment in which to advertise our products right now."

- Cash generator -

"The O'Reilly Factor" is the most widely viewed US cable news show, with an average of 3.98 million viewers in early 2017, according to Adweek.

From January 2015 to September 2016, the program pulled in some $297 million in ad revenues, according to the research firm Kantar Media.

A BMW (EUREX: BMWE.EX - news) spokesman said the German auto giant was suspending ads for the program "in light of the recent New York Times investigation."

Hyundai said it had no current ads on the program but had scheduled some.

The South Korean firm is "reallocating them (to other Fox programs) due to the recent and disturbing allegations," a statement read.

"As a company we seek to partner with companies and programming that share our values of inclusion and diversity," Hyundai said.

"We will continue to monitor and evaluate the situation as we plan future advertising decisions."

Toyota suspended ads for the show, saying "we take our duties as a responsible advertiser."

A Fox statement said the channel was working with its "partners to address the concerns.

"At this time, the ad buys of those clients have been re-expressed into other (Fox) programs," said Paul Rittenberg, executive vice president for ad sales.

Media reports said as many as 12 brands had decided to drop ads on the show as of Tuesday.

The reports on O'Reilly came as Fox News and its ousted chief Roger Ailes were hit Monday with a fresh sexual harassment lawsuit filed by a female contributor who says she was denied a job after refusing the chairman's advances.

The lawsuit by Julie Roginsky, a political strategist who was a contributing commentator, came eight months after Ailes, a confidant of the cable network's founder Rupert Murdoch, was forced out over an earlier harassment suit.

Unscheduled adjustment in DAX -

Deutsche Börse is one of the world’s leading data and technology service providers for the securities industry with a product and service offering for issuers, investors, intermediaries and data vendors. The Group covers the entire value chain from trading, through clearing, to settlement and securities custody. Deutsche Börse Market Data + Services is part of the Group's IT & Operations, Data & New Asset Classes division and encompasses its extensive market data offering and external technology and connectivity services. The product and service range includes real-time and historical data from the Group's trading venues Eurex and Xetra as well as from cooperation partners. It also includes reference data for more than 1,000,000 securities, more than 11,000 indices including the STOXX and DAX index families, superior capital market infrastructure, and reliable connectivity services.

Regulators stop London Stock Exchange's £21 billion merger with Deutsche Borse - ClickLancashire

Regulators stop London Stock Exchange's £21 billion merger with Deutsche Borse
The decision, flagged last month by LSE, thwarts Deutsche Boerse's expansion just five years after the European Union also banned a proposed tie-up with NYSE Euronext. Further complicating the picture, German police and prosecutors had opened an ...

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Trading Rises With Clearing - Markets Media

The increase in clearing following the introduction of rules requiring the exchange of margin for uncleared derivatives six months ago has been accompanied by a rise in trading activity.

Chris Barnes at analytics and research firm Clarus Financial Technology said in a blog: “The transition to clearing certainly has the propensity to make our markets more efficient. The data tells us that so far, more clearing means more volumes.”

In September last year the first phase of the new regime for requiring the exchange of margin for non-cleared derivatives came into effect for the largest market participants. Barnes said that since the rules were introduced there have been significant increases in the proportion of trades being cleared across non deliverable forwards, overnight indexed swaps, Latin American currencies and inflation swaps. For example, clearing rates for inflation swaps has increased from 10% to 80% in the past six months and volumes have increased.

“Multi-lateral netting is a huge motivating factor for dealers to clear the bulk of their portfolios,” added Barnes.

Multi-lateral netting allows to use their balance sheet more efficiently and reduces the capital requirements for their derivatives portfolios.

Clarus said this month that open interest of foreign exchange non-deliverable forwards reached more than $500bn (€470bn) for the first time due to the shift to central clearing from a bilateral only market.

The London Stock Exchange Group said in its annual report for 2016 that notional cleared NDF volumes increased to US$3,191bn last year from $1,050bn in 2015 at LCH, the exchange’s clearing house.

“While the uncleared margin rules only applied from September 2016, we are seeing significantly increased participation and interest from all regions in the ForexClear NDF service,” added the LSE.

The clearing business will also be boosted by the launch of LCH SwapAgent which is due later this year. LCH SwapAgent aims to simplify the processing, margining and settlement of non-cleared derivatives.

Clearing services raised issues when the European Commission blocked the proposed merger between LSE Group and Deutsche Börse. Commissioner Vestager said in a statement that the merger raised three main issues which all related to clearing.

The competition regulator said the proposed merger would have created a monopoly in clearing fixed income instruments, especially government bonds and repurchase agreements, and in single stock equity derivatives. Between them the two exchanges own three of the largest European clearing houses – Eurex in Germany, LCH and CC&G in Italy which is also owned by LSE Group.

For single stock equity derivatives Eurex competes with Euronext and the merger would have removed this competition.

“The companies did offer to sell off LCH.Clearnet SA, a clearing house based in France and owned by the London Stock Exchange Group,” added Vestager. “That would have answered our concerns relating to single stock equity derivatives. But it would not have been an effective solution to the de facto monopoly in fixed-income clearing.”

Vestager continued that to overcome these problems London Stock Exchange could have sold MTS, a bond trading platform, which is a small business compared to the overall size of the two companies. “But in the end, the London Stock Exchange decided not to do that,” she said.

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