NASDAQ OMX Plans IRD Platform

NASDAQ OMX has announced plans to launch a new interest-rates derivatives platform in London during the first quarter of next year.

The new venue, NLX, which is awaiting authorization from the UK's Financial Services Authority (FSA), will provide short-term and long-term interest-rate derivative products in euros and sterling, supporting registration of central order book and off-order book trades.

NLX will partner with LCH.Clearnet, with all clearing and settlement services going through LCH.Clearnet's Synapse platform and the cross-marginalizing of listed products across the yield curve taking place through LCH.Clearnet's VaR (Value-at-Risk) methodology, PAIRS.

Charlotte Crosswell, CEO of NLX, says the new platform is in "prime position" to capitalize on the market structure changes being driven by Dodd-Frank, Emir, Mifid II and Basel III.

"This new trading venue will be very exciting as it will have the potential to realize significant cost savings for customers," she says. "The combination of strong technology, risk management, and the market presence of NASDAQ OMX and LCH.Clearnet have allowed us to build a competitive offering and we have a system ready for customer testing."

Will Rhode, a principal and director of fixed-income research at TABB Group, says the buy side is desperate for solutions that can ease the collateral burden from financial market reform, while regulators in Europe will also be pleased to see a horizontal clearing structure come to market where trade flow from NLX, other exchanges and platforms, and the OTC market will be able to co-mingle within a single clearing house. "This will be a significant trading and clearing alternative to the incumbent solutions that currently dominate the marketplace," he says.