ICE Licenses Eris Methodology for 2015 Product Development

Pair target margin benefits with multi-year deal

Neal Brady, Eris Exchange CEO

Intercontinental Exchange (ICE) and Chicago-based futures venue Eris Exchange have signed a multi-year license agreement for ICE to use Eris Methodology to design listed futures and options products to be rolled out next year.

Under the agreement, ICE is licensing the rights to list European and US credit default swap (CDS) futures and European interest-rate futures based on Eris Methodology.

The first product launch under the new deal will be a CDS future based on the Markit CDX North American Investment Grade and High Yield indices.

The contracts, to be launched in the first half of 2015, will be designed to provide the regulatory certainty of futures without compromising traditional over-the-counter characteristics such as five-year tenor, spread and price-based quoting conventions, recognition of credit events and the inclusion of price alignment interest.

The agreement also includes plans for ICE exchanges to list multiple other swap futures based on the Eris Methodology in 2015, including long-awaited products in European currencies.

ICE Futures Europe will list interest rate swap futures denominated in EUR and GBP, based on the product design of Eris’ US dollar-denominated Eris Standard Swap Futures and Eris Flex Swap Futures.  All ICE swap futures products based on the Eris Methodology will be available to clients via the ICE trading platform.

“By facilitating the unique contract design that has been developed by Eris, we will be able to bring our customers unparalleled access to the European and US CDS markets and European interest rate markets through a regulated futures contract that can be cross-margined with ICE’s broad fixed income offering,” says Intercontinental Exchange chief strategy officer David Goone.

Adds Eris CEO Neal Brady, “ICE’s decision to partner with Eris and offer their global client base access to these products is further validation of the market’s adoption of the Eris Swap Futures product design.  We look forward to the launch of swap futures for the CDS Index market, where trading already occurs in standardized coupons well-suited to benefit from the capital and operational efficiencies of futures.”

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