New derivatives-trading platform to offer free market data
Interest-rates derivates-trading platform, CurveGlobal, has completed testing and is preparing to launch on 26 September with 12 market makers and four independent software vendors. The project is a hint venture between the London Stock Exchange, the CBOE and a number of banks and plans to compete by offering a lower-cost solution to existing exchanges, including free market data.

CurveGlobal’s chief executive Andrew Ross is targeting liquidity building as his next main objective, as the platform begins the countdown to its launch on 26 September.

Speaking to the Trade Derivatives Ross, a former European head of OTC clearing at Morgan Stanley, says that testing and connectivity for Curve is complete, with 12 market makers and four independent software vendors (ISVs) ready to go.

“What I feel we need to do now is less building technical hardware and much more about what we have to sell and how to build up liquidity. That means more engaging with the client side and banking community rather than focusing on the very technical area of the internal build,” says Ross.

Curve goes live in September and will initially offer short-term interest rate futures contracts similar to those already traded on ICE Futures Europe.

A key area of focus for Ross is to break down the barriers to entry. For new venues, finding a variety of liquidity providers and linking up the ISVs and order management systems (OMS) has always proved to be a difficult challenge. Buy-side firms argue they need synthetic pricing and real-time pricing on the screen before trading a new product.

Ross says CurveGlobal will have a market maker scheme in place and will provide financial incentives for banks to make prices. However, he says “we will not pay for order flow and we will not pay for people to trade. We will pay for people to put prices on the screen. We have four major ISVs connected, we are working with a fifth ahead of go-live. As for market makers, we have 12 that are signed up and ready to go.”

One significant area Ross thinks will attract the buy-side is Curve’s policy of providing free market data, a contentious issue with many asset managers and proprietary firms that believe the incumbent exchanges have a monopolistic hold on market data fees.

“When I go to the buy-side, I say, “it is cheaper for banks to make prices here; we have cheaper fees; we do not charge for market data, so on aggregate we are a lower cost solution that does the same thing as the existing exchanges,” he adds.

Stay tuned for the full interview with CurveGlobal’s Andrew Ross on The Trade Derivatives.