LSE scraps CFDs plan

The London Stock Exchange has scrapped plans to launch the world’s first centrally-cleared contracts for difference (CFDs), one of its most significant new product initiatives, the exchange said on Thursday.
The project has been abandoned due to depressed markets and the reluctance of banks and brokers that were to have been key players in the project to commit time and money at a time when they are severely capital-constrained.

Thoughts: Market Makers rejoice, you can continue dominating the market now! In any case LSE’s move appears forced, in the current economic climate banks do not have any extra resources left to participate in the developing of a central clearing house – although some of them could be accused of short-sightedness for their role in not bringing the product into fruition as they would have been the main beneficiaries. However, the only other existing central clearing exchange model in Australia hasn’t exactly experienced stellar growth either: only 50,777 CFD trades took place on the exchange between November 2007 and the end of the fiscal year 2008.

Tags: London Stock Exchange, LSE

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