Joint venture with CBoT on the cards
Euronext Liffe has confirmed that, subject to regulatory
approval, it will open a telecommunications hub in Singapore in
an attempt to develop business in the Far East. The move could
be a joint venture with Chicago Board of Trade (CBoT). he
exchange has made an application with Singaporean authorities
for direct access to the city state, which is currently being
Liffe's director of interest rate products, Amanda Sudworth,
told FO Week, "everything is subject to gaining
regulatory approval in the next few months."
But Sudworth is confident that a hub in the financial centre
will be successfully established: "We've spent a lot of time in
Singapore, and the region as a whole, over the last couple of
years and we have substantial interest."
Liffe hopes the hub will extend the reach of its global
benchmark contracts. "But?depending on the appetite we could
see more business in other contracts coming from the
Asia-Pacific region," Sudworth added. CBoT, which uses Liffe's
trading platform Connect, could be part of the Singapore hub as
it looks to expand into Asia. Although unwilling to confirm
Singapore as a hub, CBoT president Bernie Dan acknowledged that
it was one of two or three centres the exchange was considering
to expand its coverage in the region.
"There are two or three countries in Asia which provide the
kind of liquidity pools CBoT is looking at," he told FO Week.
"Clearly we're going to follow where the centre of liquidity
is." The regulatory world is different in Asia, he cautioned,
with Singapore and Australia the most international in outlook.
He hinted that with the combination of language skills,
infrastructure and incentives, "You can probably piece together
where we are going to be."
Despite this, Sudworth said Liffe would likely advance its
proposal regardless of CBoT's plans to gain further access in
the region.Sonny Schneider, chairman of Schneider Group,
expressed delight that Liffe had committed to opening an Asian
hub. He said that if Monetary Authority of Singapore speedily
approved the plans it would give a boost to his decision to set
up a subsidiary office in the region (see FO Week Vol
10 No 8).
Chris Morris, director of Saxon Financials, was also encouraged
by the development. "Without a shadow of a doubt it's very
positive because it means you're dealing with a level playing
field. As a market development I think it's a terribly positive
In Singapore, reaction to Liffe's announcement was more mixed.
A senior futures broker in the city state told FO Week that he
did not expect interest in Liffe's product range to be
immediate: "Euribor may garner interest eventually as the Euro
gains in stature as a reserve currency, [but] this is not going
happen over the next 12 months for sure."
Another broker went further, saying, "The Asian hubs will add
little value to major international FCMs as their front end
servers already connect to London and Chicago hubs efficiently.
These FCMs generate the majority of volume from Singapore, and
Asia, into Liffe and CBoT. However, one Local disagreed, saying
the large Local population would find the hubs a boon in
expanding their access into world
Chicago Mercantile Exchange (CME) announced late last year it
too would establish a Singapore hub in the second quarter of
2005 (see FO Week Vol 9 No 47), offering Asian traders
access to the Globex platform. A spokesperson for the US
exchange did not wish to predict a launch date last week.
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