In a not so shocking move, Citadel has given up its board membership at the Electronic Liquidity Exchange (ELX), according to wire reports. The move was somewhat expected considering Citadel’s joint venture with CME Group to form a central clearing facility for credit default swaps (CDS). Citadel will still keep an equity stake in ELX and use its platform – whenever the platform gets off the ground, that is. Since its launch was announced in December, some have wondered if the new exchange, which was established by several investment banks as well as Getco and Peak6, was just a rumor. But its newly-named CEO Neal Wolkoff says that ELX is indeed coming. “During that public quiet period there was a lot going on,” he says, including an evaluation of clearinghouses (ELX has not yet chosen its clearinghouse), and dealing with technology and regulatory compliance issues.
“We don’t feel it benefits us or the market to be performing on reality TV, so it’s not being done in a public way, but it’s being done,” Wolkoff says. U.S. Treasury futures will be the first product on ELX’s slate, although no launch date has been set. Of the CDS market, Wolkoff says that “when that market moves to a trading market, ELX will be interested and involved, but at the present time, the CDS market appears to be focused on a workflow that’s oriented toward processing and settlement, not towards transacting trades on an organized futures exchange.”
The big news on the clearing front today is the merger agreement between ICE and The Clearing Corporation, who are working to develop their own CDS clearing facility.
[...] I spoke with ELXCEO Neal Wolkoff in an interview for our December ‘08 issue about his appointment to ELX, I asked him about the hold up in the [...]