Offsetting risk while taking on the big players
The boss of London’s new derivatives exchange tells Elizabeth Fournier why competition is the key to success
THE WORLD of derivatives is riddled with acronyms. From OTC (over-the-counter) trades to the Mifid (markets in financial instruments directive) regulations trickling down from Europe, securities trading is a hotbed of impenetrable codes that can make talking to its participants like learning a whole new language.
But after 16 years in the exchanges business, Charlotte Crosswell is fluent.
The chief executive of Nasdaq OMX’s European derivatives platform – NLX – has spent the majority of her career hopping between the US giant and its UK rival the London Stock Exchange, witnessing the thwarted Nasdaq/LSE takeover battle in 2006-7 first hand.
After dipping her toes into private equity, Crosswell was lured back to trading by the launch of a new Nasdaq equity platform in October 2008. Though it did not survive the crisis, Crosswell did; reemerging last year as head of an interest rate exchange with big ambitions.
“Until last year interest rates in Europe were both traded on two different venues, and cleared on two different venues,” she explains. “We saw an opportunity to bring all of them onto one platform and clear all of them in the same place.”
Those two venues were big fish for a new player to take on: Liffe – the 22-year old London institution that’s now part of the IntercontinentalExchange (Ice) group; and Eurex, the German exchange that’s been trading more than 1bn contracts per year since 2003.
It took Eurex five years to hit that milestone, but just 10 months after the launch NLX is well on its way to catching up – trading more than 10m lots so far and attracting clearing banks including Citi, UBS, Nomura and RBS.
“Very early on in discussions with the market it was clear there was an overwhelming desire to support competition,” Crosswell says. “People always want lower fees but they also want something different.”
At a time of flux in the market, with Liffe joining Ice and moving into clearing, NLX cemented its success by offering clients an element of familiarity; pairing up with LCH Clearnet, where many of the big banks already held their OTC portfolios.
“We had an advantage of going in and saying ‘Yes, we’re a new venue, but all of the back office is the same as it always has been’. That’s by far the biggest reason that people supported us.”
All of this was going on during a period of intense regulatory change. As Dodd-Frank worked its way through the US, EU regulators have been thrashing out both Mifid II and the European Market Infrastructure Regulation, with Crosswell estimating she has spoken to four EU presidencies in the process of setting up the platform.
Add the oversight of the UK’s financial conduct authority, and you’ve got a maelstrom of potential hurdles to success. But Crosswell insists the process has been smooth, though demanding.
“We’re sitting here creating jobs, creating competition; we’ve got a lot of support on the back of that because it ties into the objectives of what the regulators are doing.”
While juggling global regulators, Crosswell has also found time to be one of the few female CEOs who are keen to talk about women in the workplace. “For a long time I didn’t get involved in the debate – most women in senior roles just want to get on with their jobs,” Crosswell says. “But I think if you don’t start to talk about it and look at what you can do to help then you’re doing a disservice to the next generation.
“The debate is very much open now … I’m a big fan of raising the debate and making sure there’s positive action on the back of it.”
CV CHARLOTTE CROSSWELL
■ 1991-95: Studied French at the University of Southampton.
■ 1995-98: Started her career in the European equity sales team at Goldman Sachs.
■ 1998-2004: Spent six years at the London Stock Exchange as head of international business development.
■ 2004-07: Moved to Nasdaq as head of Nasdaq International
■ 2007-08: Shifted into private equity, working as head of business development for the Pension Corporation.
■ 2008-present: Rejoined Nasdaq as it launched a new equity platform, which was shut down in 2010. Helped launch Nasdaq OMX NLX in May last year.
■ Lives in Parsons Green with her five-year-old daughter. Enjoys skiing, sailing and good wine.