IDBs are often seen as the big losers from regulatory change. However, William Mitting found that they are adapting their business models and bullish on the changes ahead.
On March 19, an application to register a derivatives
exchange was received by the Commodities Futures Trading
Commission. Should the application be successful, GFI Group
will become the third of the big five interdealer brokers to
operate or have the licence to operate a derivatives exchange
joining US rival BGC and London-headquartered Icap.
What is particularly interesting is that none of the three
appear to know exactly how exchange traded derivatives will fit
into their operations in the new world.
"It is a regulatory hedge," says GFI Group chief operating
officer Ron Levi of the application. "It is going to help us
with the [Swap Execution Facility] application. And ultimately,
you have to be able to offer your customers all they want."
Icap says its plans for the Icap Securities and Derivatives
Exchange, the rebranded Plus Markets exchange it acquired last
year, remain to improve it as a venue for the small and medium
cap equities trading and to expand its offerings to new
products. It has made no public comment on what these products
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