By Jacob Bunge
Nasdaq OMX Group Inc. (NDAQ) is planning a revamp of its tiny
U.S. futures platform to expand a global push into fixed-income
trading, according to a senior executive.
The transatlantic exchange group may offer interest-rate futures
on the Nasdaq OMX Futures Exchange, adding to the imminent launch
of a new bond derivatives market in the United Kingdom and Nasdaq's
agreed to purchase of an electronic market for U.S. Treasurys.
"We have made the strategic decision to move aggressively into
the fixed income space," said Eric Noll, head of U.S. transaction
services for Nasdaq, in an interview.
Nasdaq moves into bond markets as trading in U.S. stocks,
historically Nasdaq's core business, has slumped for three years
running. Investors have pulled money from mutual funds and stuck to
the sidelines while financial crises flared in Europe and the U.S.
economy has staged a slow rebound from the 2008 credit crunch.
The bond effort comes as part of a broader strategy to reorient
Nasdaq's business away from the trading of shares by adding
technology and corporate services. In December Nasdaq made a deal
to buy an investor relations business from Thomson Reuters Corp.
(TRI, TRI.T) for $390 million.
Nasdaq now is updating the technology that runs its U.S. futures
market, Mr. Noll said. The platform offers gold futures contracts
but trading is minimal, with no contracts reported to have traded
so far this year, according to clearinghouse operator OCC, which
processes trades on the market.
Nasdaq this week will mount a direct challenge to exchanges
owned by NYSE Euronext (NYX) and Deutsche Boerse AG (DBOEF,
DB1.Xe), launching a new platform Friday called NLX that will offer
futures contracts linked to benchmark European interest rates.
Banks and hedge funds use the contracts to shield against shifts in
key rates, or speculate on future moves.
In the U.S. Nasdaq will look to develop new interest-rate
contracts that do not duplicate those already offered on other
exchanges, Mr. Noll said. CME Group Inc. (CME) dominates trading of
U.S. rate futures, and NYSE has launched a competing market.
Nasdaq is evaluating whether to process trades in the new
contracts through OCC or another facility, including those run by
LCH.Clearnet Group or New York Portfolio Clearing, Mr. Noll
said.
Write to Jacob Bunge at jacob.bunge@dowjones.com
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