New swap-based products are predicted to draw new users into the futures market, driving investment in trading technology, finds Dan Barnes.
The cost of trading over-the-counter swaps will soar under
the Dodd-Frank and European Market Infrastructure Regulation
(Emir), but new swap-based futures contracts will offer easier
and more cost effective access to similar exposures.
Chicago Mercantile Exchange, Eris Exchange and the
Intercontinental Exchange have all launched futures products
that will relieve the burden of swaps regulation on market
participants. New entrants are also expected to be attracted by
the instruments, with technology firms predicting investment in
trading technology as a result.
"The simplification and the transparency of the futures
market means there are potentially more participants able to
trade these products, which would lead to an increase in
technology spend as firms adapt from both a front and back
office perspective," says Keith Todd executive chairman at
trading system supplier Ffastfill.
"The core that already trade futures will not see a lot of
additional spend, although there may be some additional work
around risk or the back office, as the ability to trade on ICE
or CME already exists for them."
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