Some thoughts on Nasdaq's USD futures challenge

https://www.ft.com/content/5c291db2-7e2e-11e8-8e67-1e1a0846c475

A good story by the FT team, with the ever-reliable Joe Rennison doing the reporting.

I was delighted to see Nasdaq looking to add competition to the USD futures market – indeed Ted Bragg himself said “For our clients, competition is good thing.” I couldn’t agree more as I fundamentally believe in the benefits of competition. Competition helps by controlling prices, in developing new products, reducing tick width and increasing liquidity -- things I think we’d agree these are for the universal good.

As the biggest futures market in the world, the volume in USD futures is clearly massive, and while CME is a hugely competent operator, there is much to play for.

But the building of any market infrastructure takes time, effort and not an inconsiderable amount of cost. It also requires partners across trading, infrastructure and a diverse set of end users.  So while the path is long and arduous, the ability to leverage front-end technology in the old eSpeed, and other “smart order routing” algorithms that have been built to support other markets such as CurveGlobal, should help.

I’ve not spent enough time studying the payoff profile and details of the products in the Nasdaq example but I’m encouraged by the fact that the product is innovative – ticking one of the critical success criteria points. I wish them all the best and a fair wind.

Andy