LSE Group launches interest rate derivatives joint venture

Reuters: London Stock Exchange Group Plc (LSEG) said on Friday it launched an interest rate derivatives venture, CurveGlobal, with a group of major dealer banks.

LSEG said it joined hands with Bank of America Merrill Lynch, Barclays, Citi, Goldman Sachs, J.P. Morgan and Société Générale and Chicago Board Options Exchange to launch CurveGlobal.

LSEG, which owns Borsa Italiana, MillenniumIT and the London Stock Exchange – said its initial investment in CurveGlobal will be 9.5 million pounds ($14.7 million), or a 31.67% stake, which it will try to reduce to 25% by adding other shareholders.

The investors will pump 20.5 million pounds into the venture, LSEG said.

“The launch of a derivatives exchange is a positive development in our opinion, and LSEG has chosen to do it in partnership with its customers, which we believe should support the launch of the new platform,” RBC Capital Markets analysts wrote in a note.

Trading of CurveGlobal products on the LSE derivatives market is expected to go live in the second quarter of next year, the company said.

CurveGlobal products will be cleared through the company’s majority owned LCH.Clearnet.

RBC Capital Markets analysts believe this will allow customers to use their collateral in a more efficient manner, which should also be helpful for volume development.