Nasdaq to trade derivatives in London Nasdaq OMX, the transatlantic exchanges operator, is set to launch a London-based derivatives platform to trade interest rate products in a move that puts it in direct competition with Deutsche Börse and NYSE Euronext. The platform, called Nasdaq OMX NLX, will trade short-term and long-term interest rate euro and sterling-based listed derivative products. The move will also give Nasdaq OMX a trading presence in London since the closure its European share trading platform after it failed to gain market share. Nasdaq's move is set to further ratchet up competition in derivatives trading and clearing in Europe as new market regulations begin to emerge after several years of flux. Global policy makers want to move more derivatives trading on to exchanges and have trades processed through clearing houses. Most fixed income products in Europe are traded and processed through trading venues - mainly NYSE Liffe and Deutsche Börse's Eurex - that own the execution platform and the exchange, an integrated model known as the "vertical silo." Nasdaq will separate the trading from clearing, which will be done by LCH.Clearnet, the Anglo-French clearing house which is set to fall under the control of the London Stock Exchange. The move will preserve a "horizontal"model in trading and clearing. I think it is wise they are partnering with LCH, but this is not yet a game changer. Competition in derivatives will increase, but capital and liquidity remain key. They have neither. It will take years to determine if this venture is a success," said Peter Lenardos, an analyst at RBC Capital Markets. A key aspect of the venture is that traders of interest rate derivatives will be able to offset the collateral they are required to post against other positions they hold while trading and clearing over-the-counter interest rate swaps. As a result, customers will be able to post less collateral, or insurance against their trades failing. The issue is becoming a key topic for the industry amid soft markets and banks facing tighter capital markets rules. "This new trading venue will be very exciting as it will have the potential to realise significant cost savings for customers," said Charlotte Cresswell, who will be chief executive of the venture. Nasdaq OMX NLX will operate as a separate company within Nasdaq OMX. The new venture will also be dependent on whether it can attract users such as banks to the platform. Ms Crosswell said the platform had "very positive feedback from market participants." While Nasdaq OMX has lacked a trading presence in London, the group has been preparing to beef up its focus on the UK capital markets. It has already applied for recognised overseas clearing house status from UK authorities, which would allow it to boost its physical presence and marketing efforts in the UK. The new platform will be operated from the data centre run by Equinix, the US group, just outside London. It is due to be launched in the first quarter, pending approval of a licence by UK regulators.