GMEX’s CMF: A Novel Interest Rate Product

It's been just over one week since Global Markets Exchange (GMEX) debuted. Connectivity was available at launch through X_TRADER®, and in fact the first trade on GMEX was executed between two X_TRADER users. We're planning to offer access through the next-generation TT platform later this year.

GMEX has launched Euro-denominated IRS constant maturity futures (CMF) in response to demand from end users. These demands arose from changes in the European derivatives markets that were introduced under the European Markets and Infrastructure Regulation (EMIR) and the European Commission's review of the MiFID II. These futures, positioned as alternatives to OTC interest rate swaps, allow end users to benefit from the capital and margin efficiencies of futures, which are more favorable than the higher margin requirements for cleared swaps.

Develop DIY Algorithms—Safely

Yesterday, The Wall Street Journal published an article titled "Algorithmic Trading: The Play-at-Home Version" highlighting the growth of a new crop of DIY tools that allow retail traders to easily automate their trading strategies. The users quoted in the article expressed excitement about having the ability to quickly build and deploy their own strategies, but they lamented that unforeseen issues in their algorithms led to sizable losses.

Since 1994, TT has been building tools to allow professional derivatives traders to automate their strategies. It's encouraging to see the DIY algo programming trend start to migrate to retail traders, but the potential for loss with some of these systems is a detriment. To that end, allow me to point out a few differences between our approach and the others.

ADL® (Algo Design Lab)

Our ADL visual programming platform represented a major breakthrough in algorithmic trading when it was first brought to market in 2009. Using drag-and-drop actions to assemble building blocks, traders and programmers alike can rapidly design, test and deploy automated trading strategies without writing a single line of code. With ADL, users can generate executable strategies in hours to seize and act on fleeting market opportunities in timeframes that were difficult or even impossible to achieve previously.

With ADL, users drag and drop blocks containing pre-tested code onto a canvas to create automated trading programs.


The Growth of Italian Equity Derivatives: A Conversation with Borsa Italiana
IDEM, the Italian Derivatives Market of Borsa Italiana, part of London Stock Exchange Group, is enjoying another strong year in terms of volume growth, making it one of the most interesting equity derivatives markets in Europe. Its flagship products—FTSE MIB index futures, mini-futures and options—are enjoying buoyant performance thanks to increasing interest from both sell-side and buy-side investors globally. Massimo Giorgini, Head of Business Development for Equity and Derivatives Markets at Borsa Italiana, took the time to talk with us about recent developments at IDEM.

TT: Let’s take it from the top. Massimo, can you talk a little bit about your line of business?

Massimo: Borsa Italiana has operated the IDEM market since November 1994, so we recently celebrated its 20th anniversary. IDEM is the leading global liquidity pool to access Italian equity derivatives, offering the full suite of Italian equity derivatives, including futures, mini-futures, options, weekly options on the FTSE MIB Index, plus the full range of Italian single stock options and futures—not only on Blue Chip symbols but also on some Mid Cap names. FTSE MIB index futures, mini-futures and options also can be bought and sold in the U.S. in accordance with the terms of the No-Action letters from the CFTC and SEC.

Negative Electricity Prices: Do We Get Paid for Turning on the Lights?

Possibly, but rarely

The majority of financial market participants would agree on the dogma that commodity prices can never be zero or negative. However, it is not always true in the electricity markets. While zero or negative prices aren’t especially common, they do occur. This can create real chaos in many financial calculations. For example, for an asset with a negative price, dividing by the previous price will give an undefined or misleading result if prices are zero or negative.

The electricity market price—just like a price of any other commodity—is driven by the economics of supply and demand, which in turn are determined by several external factors such as climate conditions, seasonal factors or consumption behavior. To better understand the reasons for the negative prices, one needs to look further into the mechanics of the electricity generation process.