Nasdaq NLX & LCH, new ETD IR platform
Until June next year LCH clears the contracts from LIFFE including STIRs, following which LIFFE will take on the full running of their own clearing service.
NASDAQ have announced the launch of a new ETD platform “NLX” to trade a smaller set of ETD IR products (details in this PDF) which LCH will clear.
I thought it interesting that LCH will employ the PAIRS algorithm for calculating Initial Margin, the same method used for SwapClear for OTC IR products, a form of Filtered Historic VaR. Could this be a play to provide offsets between ETD & OTC to counter a move by LIFFE to move into OTC clearing? (or CME for that matter).
Launching a new trading platform for ETD when LIFFE is already an incumbent isn’t going to be easy, more coverage here.