DECEMBER 2017 - CURVEGLOBAL NEWSLETTER
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CURVE POINTS | DECEMBER 2017  Good morning all, It’s my pleasure to pen another Christmas newsletter introduction, so whether you’ve been naughty or nice, I’m glad you’re still on our mailing list! My personal Santa’s list includes more partners joining, to trade and clear – but you’ll have to wait for January to see if the man in the white beard has delivered. We’ve a lot to be thankful for at CurveGlobal – such as winning the FOW 2017 Award for Best New Exchange with our partner LSEDM. I’m also grateful for your ongoing support, without which we couldn't increase competition, reduce margin, lower costs, and innovate with new products. Our story is resonating with a growing number of participants, and looks set to continue through the next year. Moving ahead, portfolio margining of bond futures with interest rates swaps at LCH has been approved by the regulators so as soon as the MiFID II changes have been implemented and bedded down, our clearing partners will be implementing this offset in production. Look for us spending some more time on “package transactions” in 2018, where the potential savings on real portfolios that clients could generate are astonishing, from 2% to potentially as much as 73% margin reduction, with bond and short term interest rate futures included alongside swaps.  Sincerely, 2017 Year in Review By: Emily Grimshaw What a year it’s been for CurveGlobal. As a new interest rate derivatives venture, listing our products on LSEDM, we made sure we spent a lot of time on the road at conferences and events, building relationships with participants and stakeholders. Our aim: to build strong, consistent liquidity, whilst creating a brand; becoming thought leaders; and delivering more efficiencies for our customers. A tall order? We agree. The year got off to a strong start as some market participants started to deploy smart order routers. Whilst every new participant that begins trading CurveGlobal products on LSEDM helps to create better liquidity and even better pricing on its own, the addition of a smart order router can be a game changer. April saw the successful porting of the remaining NLX positions into CurveGlobal products. This increased open interest by 30,000 lots, taking it to over 100,000 lots for the first time. The ported NLX positions and the addition of a new GCM and non-shareholder market participant using smart order technology contributed to building our volume and open interest. As you can see from the chart below, July saw us break another record, trading through 200,000 lots in volume. August was understandably quieter, but by September volumes began to soar again as we hit our highest monthly traded volume to date. The end of November into early December has been equally promising, with eleven consecutive days of record open interest and crossing through the 150,000 lots barrier for the first time. To round off a busy and successful year, CurveGlobal in partnership with LSEDM, won the FOW 2017 Award for Best New Exchange.  With this kind of support, we’re excited about the prospects for next year. So what can we look forward to in 2018? Smart Order Routers (SOR) The SOR was first developed in the 1980s, but only started to infiltrate the European markets as a reaction to the best execution rule in MIFID I, which quickly fragmented liquidity. The solution to this problem became the deployment of a SOR, which was eventually adopted by the market across multiple asset classes. A SOR is a technology that sits within a bank or broker’s front office infrastructure, agnostically and intelligently routing trade instructions to the most appropriate venue, based on a set of best execution trading parameters. The parameters can include best price, execution costs, speed, likelihood of execution and order size. Article 27 of MiFID II and the enhancement from “all reasonable steps” to “all sufficient steps” of best execution comes into force on 3 January 2018. Trading CurveGlobal products on LSEDM already offers competitive pricing, lower transaction fees, potential margin offsets and free market data, but using a SOR that includes our products could potentially put you ahead of the curve. MiFID II Portfolio Margining SONIA Futures Members of the CurveGlobal team have recently attended the BoE working group, Futures Committee, where the design characteristics were discussed. CurveGlobal plans to launch a SONIA future in 2018. Principal Trading Fee Discount Scheme   Trade Concept: For this month’s Trade Concept, we look at Block Trading using CurveGlobal European Interest Rate Futures. The ability to trade fractional blocks in CurveGlobal products on LSEDM offers value for the market in a world of MiFID II and best execution.
Example 1: CurveGlobal 3-Month Sterling Whites contracts 
Example 2: CurveGlobal 3-Month Euribor® Red contracts 
Example 3: CurveGlobal Bund calendar spread 
Clearing CurveGlobal futures at LCH
Examples provided for illustrative non-reliance purposes only, potential benefits indicated are approximate and may not be realised. A poll for a worthy cause When the open interest at CurveGlobal reaches 500,000 lots, one of the team will complete a challenge for charity. Which team member should be up first?
Monthly volumes and OI Season's Greetings from the CurveGlobal Team Press articles of noteTHE FRAUGHT SEARCH FOR A LIBOR FALLBACK TEARING UP THE MARKET: FCMS HAIL NEW COMPRESSION TECHNIQUES IN A PRE-BREXIT SKIRMISH WITH THE CITY, EUREX TAKES ON LCH EUROPEAN SPLIT ON NSFR WORRIES DEALERS Where you can find usFOW // DERIVATIVES ISRAEL 2018 FIA // BOCA 2018 To find out more about CurveGlobal or to offer suggestions on improving this newsletter, contact us at +44 20 7797 1055 or info@curveglobalmarkets.com. |