London Stock Exchange Group Plc (LON:LSE) has just announced the launch of CurveGlobal, a derivatives venture with several major dealer banks: Bank of America Merrill Lynch, Barclays PLC (LON:BARC), Citigroup Inc (NYSE:C), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Societe Generale SA (EPA:GLE), together with the Chicago Board Options Exchange.
The Investors and LSEG have signed definitive terms regarding the venture and additional shareholders are expected to join in the following months.
CurveGlobal will initially offer trading in Short Term Interest Rate (STIR) futures in Euribor and Short Sterling and Long Term Interest Rate (LTIR) futures in Bund, Bobl, Schatz and Gilts. Additional products are set to be introduced after the launch phase.
Under the plans, all products designed and supported by CurveGlobal will be admitted to trading on London Stock Exchange Derivatives Market and cleared through LCH.Clearnet, subject to regulatory approvals and relevant licences.
Through CurveGlobal, LSEG and the investors seek to provide a competitive offering in the interest rates futures market, delivering lower transaction costs. The launch of the venture will boost London Stock Exchange Derivative Market’s product offering and complement LCH.Clearnet’s recently announced interest rate portfolio margining service, which is expected to go live in the first quarter of 2016, subject to regulatory approval.
Trading of CurveGlobal products on London Stock Exchange Derivatives Market is expected to go live in the second quarter 2016, pending the receipt of necessary regulatory approval.
Xavier Rolet, CEO, London Stock Exchange Group said:
“We have a proven track record of partnering with our customers to deliver open access solutions that provide greater choice to the market as a whole. CurveGlobal is an exciting and innovative initiative for our customers and one that complements the recently announced portfolio margining solution from LCH.Clearnet’s SwapClear business.”
LSEG’s initial investment into CurveGlobal Limited, the joint venture company, will be £9,500,000 (approximately a third of the anticipated total funding capital requirements for the venture). The Investors will provide £20,500,000. LSEG’s initial shareholding will be 31.67% but it will seek to cut its holding to 25% through the introduction of additional shareholders. The Investors will hold the remaining shares.
Michael Davie, currently COO of LCH.Clearnet Group, will serve as Chairman of CurveGlobal. LSEG announced separately today that Mr Davie will be transferring to LSEG as Head of Rates Services.
Michael Davie, Chairman, CurveGlobal Limited said:
“Rate markets have undergone considerable change in recent years, and market participants are under ever-increasing cost pressures. Customers want to safely manage risk and to maximise efficiency which the compelling combination of CurveGlobal and LCH.Clearnet’s portfolio margining will deliver.”
To view the official announcement on the new venture, click here.