October 9, 2017 12:49 pm JST
Interview

US exchange encourages Asia to expand portfolio

CME head 'welcomes competition' with Shanghai crude futures

TAKESHI KUMON, Nikkei staff writer

Chicago Board of Trade, or CBOT, is one of the four exchanges under CME Group. © Reuters

TOKYO -- CME Group President Bryan Durkin hopes to tap new customers in Asia by highlighting the group's multi-asset class offerings.

CME Group, parent of the Chicago Mercantile Exchange, offers trading platforms for a wide range of futures products, such as interest rate futures, stock indexes, foreign exchange and energy futures.

In an interview with The Nikkei on Sept. 29, Durkin said of Asia: "This market is right for growth and we have emphasized our focus and efforts in building multi-asset class offerings, deep liquid markets, [and an] industry-leading platform."

Durkin sees opportunity in cross-sales of its various asset classes, utilizing the 300 people already on its regional payroll. "You may have users that have traditionally only focused on interest rates, and they haven't availed themselves maybe to foreign currency or to the metals. We use our capabilities both in education and performance of the overall contracts to draw clients into multi-asset classes," he said.

Durkin believes China's planned launch of crude oil futures trading in Shanghai will not undermine the global competitiveness of the group's mainstay crude oil futures, West Texas Intermediate, traded on the New York Mercantile Exchange.

"We welcome competition. We have proven and shown that competition is healthy for the marketplace in terms of keeping us on our toes, in making sure that the products we offer and represent remain the benchmark," Durkin said.

His confidence seems to stem from the way WTI has become a major benchmark for crude oil and liquefied natural gas product in Asia in the past few years. "It wasn't too long ago WTI was not well recognized throughout Asia. Their paradigm has changed dramatically in the past year-and-a-half."

China is the second-largest crude oil consumer in the world, and conducting trading during its own working hours and with products denominated in its own currency seem to provide an edge for local investors. But Durkin stressed the importance of "building [liquidity in a marketplace] and having the infrastructure as well." The Chinese authorities' decision to introduce a crude oil contract, for him, is underscoring the "need and demand for commodities such as WTI to be hedged. I see ... great opportunity for continued growth."

As for Japan's inconsistent rules on derivatives trading, Durkin said: "We have a very open, candid rapport with the regulators," adding: "We are used to operating in multiple jurisdictions. We have developed a profound relationship with regulators here."

CME Group has four exchanges in Chicago and New York -- CME, CBOT, NYMEX and COMEX -- under its umbrella. According to its website, it handles an average 3 billion contracts worth approximately $1 quadrillion annually.

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