Fledgling Derivatives Market Hires Ex-DTCC Executive as Chairman

(Bloomberg) — Former Depository Trust & Clearing Corp. executive Sandy Broderick has joined a fledgling European derivatives exchange as chairman.

Global Markets Exchange Group International appointed Broderick as a non-executive director, according to a statement on Wednesday. He was previously the chief executive officer of DTCC Deriv/SERV, DTCCs repository for over-the-counter derivatives trades.

Regulations passed in the aftermath of 2008s financial crisis have made it more expensive to trade over-the-counter swaps, creating an opportunity for exchanges to develop futures products — known as swap futures — that mimic the $421 trillion of derivatives currently traded away from public markets.

GMEX also named Mark Blundell as the chairman of a committee responsible for overseeing the indexes used as benchmarks by its constant-maturity futures contracts. Deutsche Boerse AGs Eurex subsidiary will handle clearing and trade confirmation. Brodericks arrival at the firm means Lamon Rutten will move from chairman of GMEX Exchange to chairman of GMEX Technologies, the business that sells technology and services to other exchanges.

The company hopes that its swap-futures exchange — due to go live in May or June — will help to drive widespread take up of the products among investors and traders. GMEX has already attracted Deutsche Boerse AG and Societe Generale SA as shareholders.

Futures products should gain acceptance at the expense of more standardized cleared swaps in the medium- to longer-term, according to a report from Greenwich Associates LLC on March 9. The consulting firm created a model that showed futures were the cheaper choice in almost every scenario.

Impending derivatives regulations in Europe in tandem with global capital rules will only make trading swaps more costly as time goes on, Greenwich said.