First Anniversary of Interest Rate Futures on NYSE Liffe U.S.

This morning, NYSE Liffe U.S. CEO, Tom Callahan sent this letter to customers marking the 1-year anniversary of the launch of interest rate futures on our exchange.  As Lynn said yesterday, we are ready to go with a number of really powerful products, services and value-added relationships that will benefit the marketplace in 2012!

Please see the video interview that Tom did with the John Lothian Newsletter here: 

From Tom:

Dear NYSE Liffe U.S. Customers,

We are extremely proud to celebrate a milestone in the development of our exchange, the one year anniversary of New York Portfolio Clearing and Eurodollar and US Treasury futures trading on NYSE Liffe U.S. It has been an amazing and eventful first year in operation for our new clearinghouse. We received regulatory approval, launched, reached 10% market share vs. CME in Eurodollar futures Open Interest, added 15 new clearing members, were tested by our first clearing member default and received prestigious industry awards such as Exchange of the Year by Risk Magazine and Most Innovative Clearinghouse by Futures and Options World. That’s more excitement than some clearinghouses and exchanges experience in 10 years, and we are proud to have come through it battle tested and poised for growth. The achievement we are most proud of in the past year is that the innovative NYPC value proposition is delivering for our customers in production exactly as designed. Clearing members who established Open Interest in NYSE Liffe U.S. interest rate futures are currently receiving substantial margin savings through the combination of cash and futures in the NYPC “One Pot”. It was a long and challenging road to build NYPC, and we are excited to now see our customers taking advantage of the substantial savings we promised.

As exciting as our first 12 months have been, we have a few big ideas still to come that will further fuel the growth of the NYSE Liffe U.S. platform:

First, we recently announced NYSE Liffe U.S. will list futures on DTCC’s GCF Repo Index. The GCF Repo Index is well positioned to quickly become a short term interest rate benchmark as it represents actually cleared and 100% collateralized transactions based on US Government securities. It’s the most well received announcement we’ve ever made as an exchange, and we can’t wait to bring this completely innovative new product to market.

Second, last week at the FIA Boca Conference we announced a new venture with our partners at LCH and DTCC called “Project Trinity”. This extends the benefits of the “one pot” to include interest rate swaps, and will be the first venture to unite cash, futures and OTC swaps in a single margin calculation. Given that LCH Swapclear currently clears over $292 trillion notional in IRS swaps, this brings a powerful new source of capital efficiency to NYPC’s value proposition and adds an unrivaled advantage for customers trading interest rate futures on NYSE Liffe U.S.

Finally,by mid-year we expect to extend the “One Pot” benefits of NYPC to the customer class of market participants, in addition to the house positions of common members of NYSE Liffe U.S. and NYPC that currently benefit from this margin efficiency. This will significantly expand the universe of market participants that will enjoy the capital savings of NYPC’s single pot which should help further expand the liquidity of our platform.

As far as we have come in year one, and with as many exciting launches as we have planned for 2012, we would be nowhere without the strong support of our customers. Creating effective competition is hard work, not only for us but also for all of you. It is only because of the strong belief of our many partners in the critical importance of competition and innovation that so many of you have dedicated time, resource and capital to support our start up exchange and clearing house. All we can say is a sincere thank you, we’ll pay back your confidence by continuing to deliver innovation and effective competition to the US futures market.

Many thanks,

Tom Callahan

CEO, NYSE Liffe U.S.