ELX Futures, which is set to launch tomorrow, says it will not charge for trades in July as it looks to strike an early blow in the battle to take market share from the dominant CME Group.
The new electronic futures exchange, set up by a group of banks and trading firms, will initially offer US Treasury futures contracts, with the intention of moving into other major asset classes.
Billing will begin on 3 August with a fee of $0.09 a contract for clearing and exchange for users with average daily volume above 400 contract sides. For low volume users the bundled fee is $0.24 a contract.
Neal Wolkoff, CEO, ELX Futures, says: "We are confident that market participants will see a noticeable difference in our technology, fee structure and customer service, and will welcome ELX Futures as an innovative alternative in the futures market."
ELX is backed by Bank of America, Citi, Credit Suisse, Deutsche Bank, Barclays Capital, Merrill Lynch, JP Morgan, Goldman Sachs, RBS, Getco and Peak6.
The exchange has been built on coalition member BGC Partners' eSpeed electronic trading platform. Clearing will be provided by the Options Clearing Corporation.
The new venture is not the first to take on the Chicago exchanges in the futures market. Others have tried and failed to break CME's stronghold, including Cantor Fitzgerald which launched its electronic exchange for US treasury futures, called Cantor Exchange in 1999, BrokerTec which launched online futures trading outfit in 2001, and Swiss/German derivatives exchange Eurex.
The launch could be marred by the failure of Trading Technologies to connect to the new new exchange. Half of the volume at the world's five biggest exchanges is currently directed via TT's screens.
Last week the firm's chief, Harris Brumfield, denied speculation that TT's failure to connect was down to personal friction between himself and BGC Partners CEO Howard Lutnick following year's of legal wrangling over software patents.