The London Stock Exchange Group is lining up former Morgan
Stanley and UBS futures head Bill Templer to run a new
derivatives venture that plans to launch swap
futures, FOW understands.
Templer, a 25-year veteran and key figure in the listed
derivatives industry, is believed to be working at the exchange
on the launch of swap futures, according to sources.
Details of how the new venture will be structured within the
London Stock Exchange Group remain unclear but FOW has learned
that the exchange is developing a swap future that will offer
cross margining against the SwapClear liquidity pool.
A number of banks are currently understood to be in
discussions with LSEG over their participation in the new
A spokesperson for London Stock Exchange Group declined to
LSEG is one of a number of European exchanges currently
looking into the launch of swap futures with the Goldman
Sachs-patented Deliverable Swap Future, which launched on CME
in the US last year.
LSE exchange rivals Eurex and Nasdaq OMX NLX are also
believed to be in advanced stages of development of a swap
LSEG’s majority ownership of LCH.Clearnet could
prove decisive in the battle for liquidity. To date, no
exchange has been able to cross margin against SwapClear, which
clears most of the European interest rate swap market.
In the wake of Emir, clearing efficiencies will become
central to participants choice of where to execute trades and
so the possibility of opening up SwapClear to cross margining
would be a significant advantage to LSEG as it seeks to build
liquidity in the new contract.
It is not clear, however, how LSEG could open up SwapClear
to its execution platform without being accused of
contradicting its pledge to operate a horizontal clearing model
Ultimately the success of any swap future is dependent upon
the order flow of the large banks however.
The LSE could win their backing by offering them a share of
ownership and profits on the new platform, which is their
current arrangement with SwapClear.
Any new launch from the London Stock Exchange could
revitalise its efforts to build a derivatives execution
The exchange last year completed the acquisition of the
stake in stock and derivatives exchange Turquoise it did not
own and rebranded the exchange as London Stock Exchange
It remains unclear whether Templer will head up London Stock
Exchange Derivatives or a new entity that will be launched to
deliver the swap future. The timing of the LSE’s
swap future launch is also unclear at this stage.