BOCA RATON, Florida, March 11 (Reuters) - Nasdaq OMX Group
said on Wednesday it is expanding into energy derivatives with energy
futures and options set to trade on the Nasdaq Futures Exchange at less
than half the prices charged by incumbents CME Group and
Intercontinental Exchange .
The energy futures and options products, collectively called Nasdaq Energy Futures, will be based on oil, natural gas, and U.S. power benchmarks, and are expected to begin trading by mid-year.
Nasdaq has been pitching the new offerings to brokerages and banks for months and has secured support from firms that collectively account for 85 percent of the volume in market, including ABN AMRO Group, Goldman Sachs, JPMorgan Chase & Co, Morgan Stanley, and Virtu Financial.
The exchange operator hopes to gain a 10 percent market share within 18 to 24 months of going live, which would make it a $50 million-a-year business, Nasdaq Chief Executive Robert Greifeld told reporters at a Futures Industry Association conference in Boca Raton, Florida.
In January, Bryan Durkin, CME's chief commercial officer, said in response to Nasdaq considering entering the derivatives market: "We welcome competition" and "I wish them well."
Futures trading has gone mostly electronic over the past decade with less efficient and more costly open outcry trading pits shut down, but the savings from doing so have not filtered down to the customers, Greifeld said, adding that Nasdaq's prices would be less than half of those charged by CME and ICE.
The new energy futures will be traded through the U.S.-based Nasdaq Futures exchange, the license for which Nasdaq acquired when it bought the Philadelphia Stock Exchange in 2008.
No products have yet traded on Nasdaq Futures, which the Commodities Futures Trading Commission reinstated as a designated contract market in November after it had been deemed dormant on Jan. 1, 2014.
The products will be cleared through the Options Clearing Corporation.
Nasdaq has a foothold in the commodities business through Nasdaq Commodities, a power derivatives market formerly known as Nordpool that Nasdaq acquired in 2010. It operates in Britain, Germany, Denmark, Sweden, Finland and Iceland.
CME and ICE, however, have a duopoly on energy futures, which can have better profit margins than in matching stock trades, for which Nasdaq is better known.
(Reporting by John McCrank; Editing by Grant McCool)
