Cboe to launch European exchange on September 6

Cboe Global Markets said the European futures and options market it will launch in September has a “critical mass” of clients after three banks and six trading firms publicly backed the new exchange.

The Chicago-based group said on Thursday it will launch Amsterdam-based Cboe Europe Derivatives, its first European derivatives market, on Monday September 6 and ABN Amro Clearing, Goldman Sachs and Morgan Stanley will join six market-makers on the platform from day one.

The market-makers are: All Options; Da Vinci Derivatives; DRW; Flow Traders; Liquid Capital Markets; and Susquehanna International Securities.

Ade Cordell, the president of Cboe NL, the group's Dutch equities exchange that will be home to Cboe Europe Derivatives, said he expects more firms to sign up to the exchange before and after it opens in September.

He said: “There will be a steady stream of customers coming onboard leading up to and post-go-live. On the funds side, the key thing is that the funds have to push the banks to connect and you can see some key banks saying they are going to be ready. On the market-making side, we need a broad-set that are willing to be there from day one. We need a critical mass of first clients and we have got that.”

Cboe Europe Derivatives, which will initially offer futures and options based on six Cboe European indices, aims to offer a transparent futures and options market that will appeal to hedge funds that are big Cboe trading clients in the US.

Cboe wants a balance of funds, their clearing banks and market-makers on the platform from day one but the management team is realistic in terms of their expectations.

David Howson, EVP, President Europe and Asia-Pacific at Cboe Global Markets, said: “For any new exchange and new clearing marketplace as this is, spreads and depths will be interesting but participants will be looking to test connectivity and ensure the trades flow through their middle and back office, and risk systems properly. Once participants get comfortable, that’s when you would see the start of the ramp-up.”

Cordell said the exchange will announce in the coming weeks details of the planned go-live dress rehearsals and incentive schemes that Cboe will offer participants.

He said: “It makes sense for a venue to ensure that incentives are in place. We have had these conversations with market participants. What we put into the public domain does need regulatory approval.”

Cordell, who joined Cboe early last year after running equity derivatives at Intercontinental Exchange, said his team is also talking to clients about the second wave of products after the initial derivatives on six Cboe stock indices.

He said: “We do have a roster of the next set of products that we plan to bring to market. We haven’t made those public but there are some obvious things like more indices and single stock products, so there are some logical steps. Clearly we will be working with market participants and engaging with them and we are already having those conversations.”