Nasdaq to launch energy futures market

OREANDA-NEWS. Exchange operator Nasdaq plans to launch a new energy futures market by mid-year that will compete with Ice and Nymex for a slice of WTI, Brent, power and natural gas trading volumes.

The new offering called Nasdaq Futures could inject more competition into an already hot-running fee war between Ice and Nymex in energy futures. Nasdaq said its contracts offer "a transparent fee structure."

Nasdaq will offer cash-settled energy derivatives cleared through the Options Clearing Corp. Initially, Nasdaq Futures will provide a platform for trading WTI, Brent, power and natural gas futures and options, with the aim of launching in mid-2015 pending regulatory approval.

Nasdaq rolled the new offering out at a high-profile futures industry conference in Boca Raton, Florida.

Nasdaq chief executive Bob Greifeld said that technological innovation in energy markets has driven down cost transaction costs, but that exchanges have pocketed most of that windfall.

"We're here with this effort to try and bring some balance of that distribution of that benefit," Greifeld said.

Nasdaq charges 20? per contract to clear equity options while other exchanges have charged more than \\$1 for energy contracts, he said.

Founding participants are ABN Amro, Advantage Futures, Goldman Sachs, JP Morgan, Morgan Stanley and Virtu Financial.

Brokerage firm OTC Global Holdings chief operating officer Joe Kelly said that given the competitive nature of the exchange industry, "I am surprised it took this long," for another exchange to enter the sector. OTC Global will support Nasdaq's futures offerings as the company has "a good track record," Kelly said.

OTC Global will continue to trade derivatives on the other two exchanges. "We are just providing all the avenues to our clients," Kelly said.