William Knottenbelt – The History of Financial Futures – Part Two

Jan 20, 2023

John Lothian

John Lothian

Executive Chairman and CEO

Growing CME Europe Expanded the Reach of Customer Service For the Exchange

William Knottenbelt was interviewed by John Lothian for The History of Financial Futures video series at the FIA EXPO 2022 as he was preparing to leave the CME Group. He joined the CME Group in 2008 after being approached by then CME Executive Bryan Durkin while Knottenbelt was the head of global futures for the Royal Bank of Scotland, which had been taken over by the U.K. government during the financial crisis that year.

Joining the CME Group was a “good moment to escape RBS,” Knottenbelt told JLN.

The first challenge for Knottenbelt, who was hired to run CME Europe, was to build it out in the face of the banks cutting personnel across departments, including futures. Knottenbelt said that before the Lehman crisis banks were very protective of end user client relationships, and the banks, not the exchanges, would educate the clients.

However, after all the bank futures desks were cut back, the CME needed to grow its sales staff in order to go to the end customer directly, Knottenbelt said. The CME would still coordinate with the FCMs, he said. This was a big change. 

Knottenbelt also spoke about the history of the CME Europe exchange and clearinghouse and how it was an insurance policy in case regulatory differences between the U.S and Europe over swaps led the CME to need a European operation to clear some customer trades there. However, ultimately the issues were worked out and the hedge was not required.

The CME did launch some European futures products on the CME Europe exchange that it decided to move back to the U.S. as it was struggling to get the margin offsets it wanted, and it would have taken too long to build up liquidity, Knottenbelt said. 

One big challenge during the 2011 to 2016 time frame for the CME and Knottenbelt was making sure the CME could cover the needs of clients in the European time zone in a timely fashion. Rather than having to wait until Chicago came online at 2:00 PM London time, Knottenbelt said CME Europe mirrored the operations of Chicago and was able to provide real-time information to European clients.

It was a big shift to move these operations to London, but it paid dividends, he said. The CME then built IT operations in Belfast and Bangalore to help internationalize its operations more, he said.

In 2016, Knottenbelt was tapped to run all CME international operations, and he sought to expand more into Asia. Increasing liquidity in Asia was always difficult, but strangely enough the CME Group was helped by former U.S. President Donald Trump, who used to tweet in the middle of the night.

This made it necessary for firms to be able to execute trades during Asian time zones and helped build liquidity during those market hours. 

Knottenbelt said his biggest accomplishment was growing the international business, which was 20 percent of revenues when he was hired and is now a third of the CME’s revenues. He also said meeting clients’ needs outside the U.S. and working with other exchanges were accomplishments, though he did not start those relationships.

He spoke about China and his first experiences there in 2000 when he was with RBS and was pushing the CME into China. 

Knottenbelt is working to get into executive coaching after leaving the CME, he said.

 

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