New futures exchange named ELX

New futures exchange named ELX

The new electronic futures exchange being set up by a group of banks and trading firms to take on the Chicago Mercantile Exchange will be named ELX Electronic Liquidity Exchange.

Bank of America, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank Securities, JPMorgan, Merrill Lynch and Royal Bank of Scotland, along with Chicago-based trading firms Getco and Peak6 and hedge fund Citadel are investing in the new exchange, which will be powered by technology developed and supplied by eSpeed.

ELX looks set to compete with the CME, which is the largest futures exchange after its takeover of Chicago Board of Trade last year. The consortium says US Treasury futures are expected to be the first product launched by ELX in 2008.

Commenting on the new name, Catherine Bartzos of JPMorgan Securities and board member of ELX, says: "The ELX brand represents a fully electronic futures exchange that is committed to delivering deep liquidity, fast and reliable execution at a cost-effective price point for all participants."

As well as disclosing its new name, the exchange says it is also launching an independent software vendor (ISV) programme to support access to the exchange by a wide range of market participants.

"The exchange looks forward to working closely with ISVs as partners in serving their clients as this is the first time that ISVs will have direct access to the eSpeed electronic platform," says Tom Rubio of Peak6 and board member of ELX.

The new venture is not the first to take on the Chicago exchanges in the futures market. Others have tried and failed to break CME's stronghold, including Cantor Fitzgerald which launched its electronic exchange for US treasury futures, called Cantor Exchange in 1999 and BrokerTec which launched online futures trading outfit in 2001.

Most recently Swiss German derivatives exchange Eurex launched a Chicago-based exchange in 2004 but the unit failed to capture a significant share of the market and struggled from its launch. UK hedge fund manager Man Group acquired a 70% stake in Eurex US in July 2006 and renamed it US Futures Exchange (USFE). The venture now focuses on providing products for hedge funds and retail investors, rather than competing against the established futures exchanges in Chicago.

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