NASDAQ NLX

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NASDAQ NLX
NASDAQOMXlogo.png
Founded 2013
Headquarters London
Key People Charlotte Crosswell, CEO
Products Interest rate derivatives
Website nasdaqomx.com/nlx

NASDAQ NLX (formerly NASDAQ OMX NLX) is the cross-product trading and clearing platform created by NASDAQ in partnership with LCH.Clearnet Ltd. The exchange, which launched on Friday, May 31, 2013, offers short and long-term interest rates on euro- and sterling-denominated listed derivatives products,[1] challenging the dominant European futures exchanges - the Intercontinental Exchange’s Liffe, which trades the short end of the curve, and Deutsche Boerse’s Eurex, which dominates the long end.

The partnership with LCH.Clearnet made sense for NLX because it has the largest swap book in Swapclear and is majority-owned by the London Stock Exchange Group, which had publicly backed moves to open up Europe’s derivatives markets to competition.[2]

In January of 2017 Nasdaq said it would close down NLX amid flagging volumes, setting April 28 as the last trading day for the exchange. During its fourth-quarter results presentation, the company revealed a quarterly pre-tax loss of US $404 million. Nasdaq will gradually offload its clients beginning in February 2017.[3]

NLX's original founders were BNP Paribas, Citigroup, GH Financials, Nomura, RBS and UBS as well as nine trading firms: DRW; Financial Market Engineering; Getco (now KCG); Kyte (now RJ O’Brien); Marex; Met Traders; Newedge (now SG); OSTC; and Tower Trading.

About

NLX offers trading of futures products in 3-month EURIBOR, 3-month Sterling, Long Gilt, 2-year Schatz, 5-year Bobl and 10-year Bund. LCH.Clearnet provides clearing and settlement services for all products. All instruments are cleared through Synapse, LCH.Clearnet’s strategic derivatives clearing platform. Listed products across the yield curve will be cross-margined within a single clearing risk pool using PAIRS, LCH.Clearnet’s proprietary Value at Risk (VaR) based margining methodology.

The Key participant banks and clearing firms include: BNP Paribas, Citi, G.H. Financials, Nomura, The Royal Bank of Scotland Plc and UBS.

Key participant brokerage and trading firms include: DRW Trading Group, Financial Market Engineering Ltd, Getco Europe Ltd, The Kyte Group Ltd, Marex Financial Ltd, MET Traders Ltd, Newedge, O.S.T.C. Ltd and Tower Trading Group Ltd.[4]

NLX is structured around the new market landscape created by the Dodd-Frank Act, EMIR, MIFID II and Basel III by offering an exchange platform to clear a variety of derivative transactions, including swaps.

History

NASDAQ NLX and LCH.Clearnet received the necessary regulatory approvals to launch the new market on May 29, 2013.[5]

The timing of the launch made it a challenge, because NLX's first year coincided with the introduction of new rules on swaps trading as part of the Dodd Frank Act.[6]

NLX launched with an incentive scheme for market-makers and founding members. The firms that joined the exchange or were near completion of their connectivity before the end of June paid no fees during the month and received a full rebate for all fees up until the end of the year.[7]

To celebrate its one year anniversary on June 2, 2014, NLX launched two new NLX TED Spread Strategies, White and and Rosé.[8]

In March of 2015, Nasdaq NLX became one of the first exchanges to sign up to use LCH.Clearnet's new portfolio margining service, which was expected to boost NLX's trading volume.[9]

In June of 2015, FOW reported that Nasdaq NLX had paid off all of its founding members and ended their founding member agreements. The 15 founders had agreed to support the venue when it launched in return for a portion of the profits when certain trading levels were reached; however, trading volumes fell in 2015 to a fraction of what they were the previous year after NLX replaced its rebate incentive schemes with a new program that paid different rebates per lot based on the volume of trading by individual clients.[10]

The exchange also reduced the number of market-makers on its platform to four from about 10 at its peak.[11]

John Lothian News Interviews

London Exchange View: NASDAQ OMX NLX
CEO Charlotte Crosswell Gives NASDAQ OMX NLX's view as part of the John Lothian News special report, London: On a Pedestal.


Charlotte Crosswell Talks About The New NASDAQ OMX NLX
The interest rate market will get some more competition in early 2013 with the launch of the NASDAQ OMX NLX futures exchange. JLN editor-in-chief Jim Kharouf spoke with exchange CEO Charlotte Crosswell, at IDX 2012 in London, about the new exchange's move into euro and sterling-based short-term interest rate and long-term interest rate contracts, the trading and clearing platform and who will be participating in the new market. Published July 9, 2012.

Key People

References

  1. Nasday OMX NLX. NLX.
  2. Has LCH.Clearnet saved Nasdaq NLX?. FOW.
  3. [{{{url}}} Nasdaq to shut NLX derivatives platform]. Reuters.
  4. Key Banks, Clearing and Trading Firms to Support NLX. Advanced Trading.
  5. NASDAQ OMX NLX AND LCH.CLEARNET RECEIVE REGULATORY APPROVAL TO LAUNCH TRADING & CLEARING FOR NEW MARKET. NASDAQ OMX NLX.
  6. Nasdaq NLX says 10 percent market share in key contract shows momentum growing. Reuters.
  7. Solid start for NLX but the real challenges lie ahead. FOW.
  8. NLX TED SPREADS. NASDAQ OMX NLX.
  9. Nasdaq NLX signs up for LCH's new margin service. FOW.
  10. NLX switches rebates, warns over abuse. FOW.
  11. Nasdaq NLX pays off founding members. FOW.