Experts project robust growth in trading volumes on Nasdaq OMX Group’s new energy derivatives exchange, despite oil prices’ recent moves into bear market territory.
After U.S. oil prices met the common definition of a bear market last week — by falling more than 20% from recent peaks, the Brent crude oil price LCOU5, +1.69% followed suit this week. The international benchmark dipped into a six-month low on fears of further reduced demand from China, the world’s second-largest energy consumer.
The Nasdaq Futures Exchange, launched on July 24, offers futures and options based on oil, natural gas and U.S. power benchmarks. Collectively called Nasdaq Energy Futures, or NFX, these energy derivatives from Nasdaq NDAQ, +0.69% are duplicative of the existing contracts offered by the new exchange’s competitors in the energy derivatives space — CME Group CME, +0.88% and Intercontinental Exchange ICE, +0.60% .
“We are very happy with how it’s started, and we are seeing good market-maker participation. That’s what we are looking for first — to establish good market quality,” said Magnus Haglind, head of U.S. Commodities for Nasdaq and CEO of the new exchange, in a telephone interview.
To ease the transition, NFX offers a fee holiday for the first nine months of trading, after which it plans to more than halve the transaction costs offered by existing exchange operators, Haglind said.
“The average rate per contract, which is typically the way you calculate it, is around $1.30 in the industry, and our average rate per contract will be below $0.50,” Haglind said.
To Haglind, the cut in transaction costs will significantly enhance trading volumes on the new exchange, even with tumbling oil prices.
“When the price of the asset you are trading is going down…certainly the cut in transaction costs becomes very welcomed,” he said. NFX aims to achieve a market share of 10% within 18 to 24 months of launch.
To Read more at: http://www.marketwatch.com/story/oils-bear-market-may-challenge-nasdaqs-new-energy-futures-exchange-2015-07-30
After U.S. oil prices met the common definition of a bear market last week — by falling more than 20% from recent peaks, the Brent crude oil price LCOU5, +1.69% followed suit this week. The international benchmark dipped into a six-month low on fears of further reduced demand from China, the world’s second-largest energy consumer.
The Nasdaq Futures Exchange, launched on July 24, offers futures and options based on oil, natural gas and U.S. power benchmarks. Collectively called Nasdaq Energy Futures, or NFX, these energy derivatives from Nasdaq NDAQ, +0.69% are duplicative of the existing contracts offered by the new exchange’s competitors in the energy derivatives space — CME Group CME, +0.88% and Intercontinental Exchange ICE, +0.60% .
“We are very happy with how it’s started, and we are seeing good market-maker participation. That’s what we are looking for first — to establish good market quality,” said Magnus Haglind, head of U.S. Commodities for Nasdaq and CEO of the new exchange, in a telephone interview.
To ease the transition, NFX offers a fee holiday for the first nine months of trading, after which it plans to more than halve the transaction costs offered by existing exchange operators, Haglind said.
“The average rate per contract, which is typically the way you calculate it, is around $1.30 in the industry, and our average rate per contract will be below $0.50,” Haglind said.
To Haglind, the cut in transaction costs will significantly enhance trading volumes on the new exchange, even with tumbling oil prices.
“When the price of the asset you are trading is going down…certainly the cut in transaction costs becomes very welcomed,” he said. NFX aims to achieve a market share of 10% within 18 to 24 months of launch.
To Read more at: http://www.marketwatch.com/story/oils-bear-market-may-challenge-nasdaqs-new-energy-futures-exchange-2015-07-30
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