Clear Street plans US futures launch in first half 2024, files in UK

Clear Street plans to launch its US futures clearing broker in the next six months and has filed with the UK regulator to launch a similar service in London.

New York-based Clear Street, which applied in July to the US futures regulator for approval to start clearing futures, said it secured this approval last month and is now working on connectivity ahead of launch.

Andy Volz, the chief operating officer of Clear Street, told FOW: “We received approval from the National Futures Association in December which was one of the important steps in launching the futures commission merchant (FCM) business. In the US we are now pursuing membership with numerous exchanges. We anticipate clearing our first transaction in the first half of this year.”

Volz said one of the early challenges is testing with and then going live on the main US and international futures markets. “The exchange memberships will stagger, but I anticipate we will have exchange memberships on all targeted exchanges by the end of the year.”

He added: “We will be a clearing member of all major global exchanges, offering access to products including indexes, rates and commodities.”

Another challenge is linking clients to Clear Street and its futures clearing technology BASIS, which was acquired in July and is currently being integrated into the existing Clear Street technology framework.

Volz said: “Our focus are market-makers, proprietary trading groups, hedge funds, CTAs, introducing FCMs and institutional customers.”

Another important stream is staffing, where Clear Street has already made progress with the appointments of former ED&F Man Capital Markets chief Chris Smith in August and John DiBacco, formerly of Virtu, GETCO and UBS, in October.

The Clear Street COO said: “Our CEO of Clear Street Futures, Chris Smith, has begun to establish a senior team in the US which we will develop over time as we continue to build out the support areas.”

And Volz said Clear Street is already moving into London: “We also have made a Financial Conduct Authority (FCA) application for a futures business in London, which we submitted in November. Our futures business in London won’t come before the US but ultimately the futures commission merchant (FCM) will have an international component to it.”

Volz added: “With regard to London, we have hired a senior executive and are in the process of building out the team. We expect to have a team of five experienced hires in the next month or so.”

Futures clearing is important to Clear Street as it is currently a crucial missing piece in the firm’s plan to become a full service prime broker covering futures, options, equities and fixed income.

Volz added: “The plan for the UK is similar to that in the US, including futures, prime brokerage, both cash and synthetic prime, execution of equities and options, and securities lending.”

Looking ahead, Volz said Asia is likely the next opportunity. “We haven’t made any significant plans for Asia but that would be the next obvious extension once we get through London.”

Clear Street secured in April a second tranche of funding worth $270m (£218m), taking its series B round to $435m and valuing the group at $2bn.