CME Europe launched in March with an eye on currencies. William Knottenbelt, head of European business operations for CME Group and the CEO of CME Europe, says that the exchange has a core group of seven clearing members with more on the way and its currency products are positioned well for the market. And that, he says, is just the beginning for the European exchange.
“We’re starting now to see the volume beginning to come into the market,” Knottenbelt told JLN at the IDX conference in London. “As we get more and more clearing members and execution members coming on board, we’re getting a good flow of business and we just see that building.”
CME Europe started off with 30 currency pairs and is planning to move into various commodity sectors. It plans to move into energies soon, with natural gas futures coming in September, pending regulatory approval. The exchange is also looking at softs and metals as well.
“We’re looking at European gas and power contracts,” he said. “We’re also looking at something in the metals markets and we’re also looking to increase our FX suite of products. So we have a number of things we’re looking to launch this year.”
As the exchange battles with other European exchanges, including Eurex’s foray into currencies on July 7, Knottenbelt says the exchange is well positioned to take on the competition.
“The market in Europe is very very competitive, with new exchanges opening up and people gunning for others’ contracts,” he said. “That leads to increased competition and we think that’s good. And from our perspective, we’ve picked our products carefully. We think we have an advantage in the foreign exchange market, given that we already developed a contract in the US.”
With increased regulation from requirements in Basel III, Knottenbelt believes more FX and other OTC contracts will be pushed onto exchanges.
“We think that is going to be quite a game changer, especially going into next year when the cost of being an FX PB (prime broker) is going to increase,” he said.