Global Markets Exchange Group Limited (GMEX Exchange) today announced approval from the Commodity Futures Trading Commission (CFTC) to offer its Interest Rate Swap Constant Maturity Futures (IRS CMF) to U.S.-based firms by directly accessing GMEX Exchange. Trade confirmation and clearing of the GMEX IRS CMF takes place at Eurex, the derivatives marketplace of Deutsche Börse. Transactions will be processed via the Eurex Trade Entry Service, which has been made available to U.S. based exchange participants recently.
Hirander Misra, CEO and Co-Founder of GMEX Exchange commented: “With the CFTC approval, we can further expand by offering our IRS CMF to U.S.-based firms. This is an important part of our growth strategy as it enables a wider range of buy and sell-side participants to gain access to our innovative products to facilitate effective hedging of their interest rate exposure.”
The IRS CMF contracts bring the benefits of futures trading closer to OTC products, while delivering the efficiencies of centralised order execution, standardised central clearing and hedging of interest rate exposure. GMEX Exchange has signed a number of firms including Bank of America Merrill Lynch, Société Générale and R.J. O’Brien to trade the contract.
The contracts provide a much lower margin alternative to plain vanilla OTC IRS for hedging given the increased capital requirements relating to EU Commission’s mandatory central clearing and front loading rules for IRS. The new regulation will likely come into force in April 2016 with buy-side firms having six months to comply.