NYSE Liffe U.S. and Interest Rate Futures

Dear Traders:

You should consider writing a thank you note to the firm that clears your trades.

As you may be aware, NYSE Liffe U.S. just launched Interest Rate Futures (Eurodollar Futures went live last Monday, March 21 and a full suite of Treasury Futures on Monday March 28) to coincide with the launch of New York Portfolio Clearing (NYPC), the joint venture between NYSE Euronext and DTCC. NYPC offers significant capital and operational efficiencies to market participants by treating a trader’s portfolio holistically from a margining perspective across fixed income securities and futures. In essence, through this new solution, portfolios are margined according to their overall risk to the market across asset classes, not the standard silo’ed approach that has historically existed in fixed income futures and securities.

So you ask: “why has it taken so long to bring something to market that makes this much sense?”  Well the answer is simple – there’s a lot of hard work that goes into delivering this type of innovation to the market. Hard work from those building the solution, hard work from the regulators and hard work from the clearing members who facilitate the seamless clearing of these trades.  Its hard but rewarding when we see our customers utilizing the platform and maximizing its value.

What most people don’t understand is that a clearing system is not just a single system, rather an inter-connected web of systems which connect to an exchange’s matching engine. There are independent banking, settlement, trade matching, fee systems, and more that all inter-operate to clear a single trade.  As such, it’s not as simple as a trade flowing from one matching engine to one clearing system – it’s more a case of a trade flowing from an exchange’s matching engine to multiple inter-connected back office systems. If something goes wrong with one back office system, the potential knock on effects are enormous. As a result of the high possibility for error, clearing houses are not started every day, and as you can imagine, there is an enormous amount of effort that has to go into bringing them live.

Such has been the case with NYPC where we have had the dedicated focus of many teams from our initial clearing members for months, working with us to troubleshoot issues, and enabling us to bring this innovation to market in a almost seamless fashion, integrated into the day to day operations of these firms.

So this brings me back to my initial comment – giving a big thank you to the clearing members of the world for all the time and focus over the last few months for doing the hard work to integrate into NYPC (details can be found here). The work they have done and focus they have exhibited over the past few months allows you to continue your existing day to day operations while dipping your toe into the extremely liquid NYSE Liffe U.S. Interest Rate Futures market and taking advantage of the capital and operational efficiencies we’ve delivered to market.

Feel free to reach out to (lmartin@nyx.com) directly for details on how to get involved…Look forward to hearing from you soon.

 P.S. – we’ve traded over 300k contracts since launch!  Click here to see the NYPC team ringing Tuesday’s Closing Bell on NYSE Euronext’s YouTube channel.