In the second part of FO Week's debate about exchange systems, representatives from some of the world's largest marketplaces discuss the pros and cons of licensing electronic platforms to other exchanges, an area which has become an increasingly important revenue generator. Annalie Grainger chaired the discussion.
There have been a number of platform licensing
agreements signed over the last few years, including the most
recent one between CME [Chicago Mercantile Exchange] and Nymex
[New York Mercantile Exchange]. What do you see as the pros and
cons of exchanges licensing their platforms?
Simon Chapman, executive director of
derivatives technology services, Euronext Liffe: You get to
share in development costs and you get to share the
distribution, which I think is important. Euronext Liffe, like
CME, has invested for over eight years to increase its number
of sites and improve the standard of technology we have.
Customers don't want ten or 20 exchanges all investing the same
dollars to buy the same thing to compete with each other
because we already compete on a number of fronts.
Technology is one area [of competition] but I think it is
known now that it is about much more than technology. I think
eight years ago we would have resisted it, but as more and more
people have gone onto electronic trading systems it has
become clear that there are more differentiators than
just the technology. It is the regulatory environment that you
provide, the quality of service, the distribution, the way you
use the functionality, the way you deliver it out to those
customers and what you can allow the customers to do.
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