NEWS UPDATE
NEWS UPDATE
EQUITIES P O S T-T R A D E
Cboe looks to add speed bump to
equities exchange Barclays to provide US client
swaps clearing through Eurex
LP² four millisecond delay mechanism will be applied to the Cboe EDGA exchange to
protect market makers from high-frequency traders. The move follows a rebrand of Barclays’ agency derivatives services business, and
aims to ensure continued access to market in face of Brexit.
C
boe Global Markets has submitted an application to
US authorities to implement a ‘speed bump’ on its
equities exchange.
Cboe confirmed in a statement that it plans to intro-
duce a Liquidity Provider Protection feature, known as
LP², on its EDGA exchange in a bid to improve liquidity
and to allow market makers to take more risk and
quote tighter spreads with greater size.
Under the exchange’s proposal, which is open to
industry feedback, liquidity-taking orders sent to EDGA
will have to wait four milliseconds before trading with
resting orders in the order book. Cboe said that this
will provide market makers with sufficient time to
re-price their resting orders before ‘opportunistic’, or
high-frequency traders (HFTs), can trade with them at
old prices.
“Our proposed LP² initiative is the result of vital and
ongoing consultation with customers and investors,
and we will continue to actively seek out ways to deliv-
er innovative and flexible solutions that best meet their
needs,” said Bryan Harkins, co-head of markets division
at Cboe Global Markets.
Cboe’s speed bump will be the third implemented at
major US exchange groups after IEX and NYSE Ameri-
can deployed the tool in recent years, despite wide-
spread outcry from incumbent exchanges over IEX’s
first move to slow down HFTs with a speed bump.
The exchange added that existing delay mechanisms
applied by IEX and NYSE do not provide protection to
market makers and participants that post two-sided
markets, whereas LP² would promote price forming
displayed liquidity.
TECHNOLOGY
Refinitiv to acquire cloud-based OMS provider AlphaDesk
Acquisition to further Refinitiv end-to-end trading solution with order and portfolio
management capabilities, expanding on existing execution and analytics services.
R
efinitiv has announced it is to acquire order manage-
ment system specialist AlphaDesk to boost its end-to-
end trading portfolio.
Refinitiv will integrate the AlphaDesk platform, which
provides order and portfolio management, risk, and
compliance solutions for buy-side users, into its existing
front-office suite that includes the EMS platform from
REDI, which it acquired in January 2017.
The vendor currently provides pre-trade data and analyt-
ics through its Eikon platform, and will use the multi-asset
and multi-currency reach of the AlphaDesk OMS platform
12 // TheTrade // Summer 2019
to expand its workflow capabilities as the roles of buy-side
traders and portfolio managers continue to converge.
Terms of the deal were not disclosed, although Refinitiv
stated it expects the acquisition to close in the second
quarter of 2019.
“Our past collaboration with AlphaDesk makes them a
strong fit for us, and the integration of their platform with
our existing products further expands Refinitiv’s presence
as a premier trading solution for professionals across the
buy-side community,” said Michael Chin, managing direc-
tor and co-head of trading at Refinitiv.
B
arclays has confirmed that it has become the latest
investment bank to provide its clients based in the US
with access to Eurex for clearing of interest rate swaps.
The move makes Barclays the first European invest-
ment bank to offer Eurex over the counter (OTC) clearing
via its US registered futures commission merchant (FCM),
as the clearing house continues its push into North
America.
Speaking to The TRADE, the head of Barclays’ recently
rebranded Prime Derivatives Services business for the
Americas, Stephen Li, said that the decision to connect
to Eurex was driven by client demand for an alternative
liquidity pool in euro interest rate swaps, as well as
incoming regulation and the need for continued market
access in the face of uncertainty around Brexit.
“The challenge is around how we interact with events
like Brexit and regulation. With Brexit, we could poten-
tially see a move away from the dominant clearing house,
which in this case is LCH, and Eurex had anticipated that.
Following Eurex’s recognition in the US as an approved
clearinghouse, we felt that we needed to provide access
to ensure that if there was a shift from a liquidity stand-
point, especially around euro swaps, we would be ready,”
Li told The TRADE.
“This isn’t just about Brexit, it’s also about navigating
new regulations such as the uncleared margin rules. Al-
though the uncleared margin rules won’t hit many of our
clients until 2020, they are far more focused on margin
optimisation, and we have to start thinking about what
that client offering will look like in advance.”
Barclays has recently rebranded its Agency Derivatives
Services business to Prime Derivative Services after
integrating its derivatives clearing and execution services
with the prime brokerage division, as part of a reorganisa-
tion of the business.
“The rebrand to become Prime Derivatives Services, and
bringing the derivatives clearing and execution under the
same roof as the prime brokerage business is the culmi-
nation of four years of restructure and investment. We’ve
grown the business 28% over this same period, our big
focus is on the clients, keeping close to them and what
they need,” said Gary Saunders, head of Prime Derivatives
Services EMEA at Barclays.
Looking to the future, Saunders added that Barclays is
looking more into the evolution of FX post-trade services
as the bank prepares to launch non-deliverable forward
(NDF) clearing later this year.
“FX Prime Brokerage has been part of our prime busi-
ness for over 15 years and FX clearing will be part of the
business when roll out NDF clearing at some point during
the summer for our clients. We think that FX will be the
next area where the industry sees change and evolution,”
he said.
Citi was the first investment bank to offer client swap
clearing through Eurex at the beginning of this year, after
Eurex received authorisation from the US derivatives
trading regulator to operate as an approved clearing
house.
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