A number of leading European asset management firms have declared their intention to trade the Euro-denominated Interest Rate Swap Constant Maturity Futures (CMF) contracts on GMEX Exchange via their prime brokers.
These include Lyxor Asset Management and Old Mutual Global Investors.
Many firms on the buy-side are seeking a much lower margin alternative to plain vanilla OTC interest rate swaps for hedging given the increased capital requirements relating to central clearing and front loading rules. The GMEX CMF contracts are more closely aligned to the interest rate swap market than any other exchange product currently available.
Orders will be electronically arranged on the GMEX Exchange platform, with trade confirmation and clearing occurring at Eurex. This allows buy side firms to use the prime brokerage arrangements already in place for other Eurex fixed income derivatives products to trade, clear and settle the CMF contracts. Multiple prime brokers are in the process of connecting to GMEX Exchange to facilitate this from launch.
“As a diversified CTA Manager, we always seek to enlarge our trading universe in a liquid, listed and cleared framework. We clearly welcome the rise of contracts such as the GMEX CMF as they will give us access to truly diversifying risk exposure previously only available in the OTC space,” says Guillaume Jamet, Principal Manager of the Lyxor Epsilon Program”
"We expect to be able to trade the GMEX CMF via our usual broker dealer network, when our new funds at Old Mutual Global Investors launch, subject to regulatory approval. We have been looking for a more margin efficient alternative to interest rate swaps for hedging our new portfolios and believe that the GMEX CMF will more closely match our requirements than any other futures contracts currently available," says Russ Oxley, Head of Rates and LDI at Old Mutual Global Investors. "We also like the fact that we can use the collateral and operational processes in place for existing Eurex fixed income derivatives products,” he added.
Global Markets Exchange Group Limited (GMEX) is authorised and regulated by the UK Financial Conduct Authority (FCA) to operate GMEX Exchange.
