Galen Stops examines the state of the European interest rate markets and questions whether Nasdaq can break the duopoly of Liffe and Eurex.
Business has not exactly been booming in the exchange traded
interest rate derivatives market of late. Volumes in the asset
class are down significantly on both NYSE Liffe and Eurex, who
between them dominate this market in Europe.
What’s more is that the causes of this slump
– the continued uncertainty over the Eurozone crisis
and the zero interest rate environment – are not
problems that show signs of abating any time soon.
For the first seven months of 2011, Eurex’s
interest rate products were traded 390.8m times while to date
this year 283.3m of these contacts have been traded, a 27.5%
drop in the space of one year. Similarly Liffe’s
European operations have seen interest rate volumes drop 20%,
from 347.8m to 278.2m during the same period.
So why is it that just as the interest rate markets appear
to be at their lowest ebb competition in this segment is really
hotting up? Liffe and Eurex have been busy launching new
contracts and now Nasdaq is trying to muscle its way into this
market with the planned launch of its new NLX platform.
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