CME Group first established its presence in Europe in the late 1970s, in order to be close to European-based clients. However, it is only in the past seven or eight years that the business has grown into a major regional player in the competitive European clearing and exchanges landscape, with an accelerating build-up since 2011.

The launch of CME Clearing Europe in 2011, our Belfast technology centre opening in 2012 and our European Trade Repository launching earlier this year, have all provided the momentum needed for the launch of our newest exchange, CME Europe.

In recent years, client needs have changed significantly. Flexibility has been particularly important as the consequences of the financial crisis have become clear, transforming attitudes to risk and triggering a wave of market-altering regulatory reforms. In particular, the EU continues to strive for greater financial stability in the over-the-counter (OTC) derivatives market, introducing reforms to improve transparency and reduce systemic risk. As in the US, where equivalent reforms are being introduced by the Commodity Futures Trading Commission, CME Group is supporting these efforts in Europe.

A different market
While regulatory change has certainly played some part in enabling us to position ourselves in Europe, it is not the main reason we are here. Fundamentally, we have always believed in going to where the market is and where our clients want us. For example, 60 percent of world FX trading takes place in Europe, which is why we launched our European exchange with FX products.

When we began our international growth, we quickly recognised that Europe is a very different market to North America. Products that work in Chicago and New York don’t necessarily work in London or Geneva. The competitive landscape in derivatives in Europe remains very different from the US. Europe is a richer, more complex environment consisting of multiple unique markets.

These market and cultural differences made us realise that it was important to concentrate our European strategy from our European headquarters in London, in order to deliver the best offering to customers who span all of Europe’s major financial centres. We have taken this approach a step further by developing a sophisticated client management system to ensure close liaison – in a way derivatives exchanges never did before – with end user clients, as well as future commission merchants and clearing members.

The place to be
Furthermore, our growth in Europe has coincided with the evolution of the bilateral world and a shift to more clearing for OTC products. End users want choice for OTC clearing, and our strengths here will be a catalyst for new products in the future as we grow our new exchange and CME Clearing Europe.

As our exchange opens for business, we are more optimistic than ever about CME Group’s future in Europe. Our clearing house and new trade repository are both growing, we have employed the right people, including highly seasoned European leaders, and all of the building blocks are in place to achieve real success in a part of the world that will be instrumental in driving forward our entire firm’s ambitions.

We understand that our most recent endeavours will take time to develop, and we want to build our business carefully. Our focus remains on listening to clients, being innovative and staying alert to new opportunities. Competition and choice are going to remain critical to European derivatives users, and this will drive a lot of what we will do. Capital efficiency will only gain in importance, and if, for example, cross margining develops further in Europe, CME Europe and CME Clearing Europe will be well placed.