CME Group, operator of the world's largest futures exchange, has applied to the Financial Services Authority to establish a European derivatives market based in London.
Pending regulatory approval as a Recognised Investment Exchange, CME Europe Ltd will initially begin trading foreign exchange futures products and is expected to launch mid-2013.
Robert Ray, currently managing director, products and services, will become chief executive officer of CME Europe. CME Globex will be used as the electronic trading platform and CME Clearing Europe Ltd, which launched in May 2011, will provide central counterparty clearing services.
The initiative will pitch the CME against Europe's established derivatives markets Eurex and Liffe, and give prospective new market entrants such as Icap and the London Stock Exchange pause for thought.
Terry Duffy, CME chairman and president, says that more than 20% of the Exchange's current volume originates in Europe.
"Having an exchange in London that can leverage the central counterparty model of CME Clearing Europe will allow us to align ourselves even more closely with our regional customers in both listed futures and over-the-counter markets, and provide additional opportunities to our expanding non-US customer base," he says.
A blockbuster merger between the New York Stock Exchange and Deutsche Bourse was torpedoed by competition chiefs in Brussels last year over fears that the two exchanges would present a formidable obstacle to competition in European derivatives trading.