Liffe, the international derivatives business of NYSE Euronext - the transatlantic exchange group formed in 2007 - responded to the growth in OTC equity derivatives by working with customers to develop the award-winning Bclear. Developed in 2005, Bclear is Liffe's solution for the OTC world and was developed to repatriate much of the OTC 'exchange look-alike' business back to the exchange. The unique and broad combination of benefits, from reducing operational risk (inherent in back-office administration of OTC transactions) to offering a flexible, anonymous and low-cost way to process wholesale equity derivatives, meant that Bclear appealed to a wide range of firms from day one.
Flexibility and privacy
Perhaps the two key features that have made OTC trading so attractive over the last decade are the privacy and flexibility that it offers, especially when compared with traditional listed markets. When you trade OTC, there is no requirement to publish trades to the market. With Bclear, Liffe has replicated the OTC market and combined the best of both the exchange and OTC trading worlds. So, not only can users choose whether or not to publish trades, they also have the flexibility to specify contract maturity, exercise price and settlement method. It is essentially this mix of flexibility and privacy, combined with the additional benefits of low fees and product choice, that attracted the early adopters of Bclear.
Wide range of products
Bclear has expanded rapidly from the original 300 European stock options available at launch in 2005. Today, futures and options on almost 1,000 European, US and Asian single stocks and 13 European indices are accessible via the service. This is growing continually with new names added every month, most of which follow specific customer requests. Looking at the Nordic region in particular, Bclear covers all of the top blue chips and just over 100 names in total, including Nokia, Ericsson, Nordea, Telia Sonera, Norsk Hydro and Danske Bank.
Success to date
Bclear has grown phenomenally so far, with current year-on-year growth at 65%. With further initiatives in the pipeline and a steady flow of customer requests for new products, 2008 looks set to be another great year. The volume on Bclear is largely thanks to the hedge fund community, whose demand has been instrumental in its growth. However, Bclear has proven to be popular among all market participants from existing exchange members to traditional asset management firms.
With further innovations planned and the move towards new asset classes, Bclear is set to continue to be an attractive way for funds to access the low-risk environment of an exchange and clearing house, while still getting the benefits of the OTC world.
Joakim Stenberg Bclear Business Development - Scandinavia NYSE Euronext E. [email protected]
T. +44 (0)20 7379 2973