London Stock Exchange Group is to shut its lossmaking derivatives exchange CurveGlobal Markets after the five-year project failed to make headway against rivals in the European fixed income market.
CurveGlobal will cease trading at the end of January 2022, the LSE said in a notice posted on its website late on Tuesday. Some contracts, including futures on German government debt and long-dated UK gilts, will cease trading with immediate effect because there were no open positions, the exchange added.
Its closure marks an end to the LSE’s long-held ambitions to challenge the dominance of Deutsche Börse and the US’s Intercontinental Exchange in the European bond derivatives market, used by traders and investors as key indicators of changing sentiment in money markets.
It was launched in 2016 by seven of the world’s biggest investment banks, the LSE and Cboe Global Markets with an initial injection of £30m but has repeatedly required funding. A second round of funding in 2018 raised £20m while the LSE had to pump in another £11m in 2019, taking its equity stake to 44 per cent.
Yet CurveGlobal lost £4m last year and the LSE, under a new management team, switched its attention from derivatives trading to data with the $27bn purchase of Refinitiv.
The closure adds to the list of failed efforts in derivatives markets to move a meaningful bulk of trading from one venue to another. Traders typically keep the bulk of futures business on one market, to make it easier to open and close their positions. The US exchanges CME Group and Nasdaq shut down their own efforts to break into European markets in 2017 after they were unable to make headway.
Any open positions after January 28 will be settled with cash at LCH, CurveGlobal’s clearing house. An incentive scheme, in which traders were given monthly cash awards in return for trading on the venue, was due to end on September 30 but will be terminated early. It will also shorten the trading hours of some CurveGlobal contracts.
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September 22, 2021 at 01:53PM
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LSE to abandon lossmaking derivatives exchange - Financial Times
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