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30 October 2013

Investor protection improved with centrally cleared CFD launched in partnership with Commerzbank, ING and Citi

30th October 2013, London: Cantor Fitzgerald Europe (‘Cantor’) and LCH.Clearnet Limited (‘LCH.Clearnet’) announced today that they have launched Europe’s first centrally cleared OTC Contract for Difference (‘CFD’) in partnership with Commerzbank Corporate & Markets, ING and Citi. The initiative is in response to client demand for a reduction in risk to CFD providers, and is in line with regulators’ stated aim of increasing the proportion of cleared OTC contracts.

CFDs are cash–settled derivatives that track the difference in price of an underlying asset. They have become increasingly popular with investors over the last decade, providing a simple way to trade on a leveraged basis for both long and short positions.

Central clearing of CFDs by LCH.Clearnet provides counter-party risk mitigation to the customer of the CFD provider in the event of the provider’s default. The hedge entered into between Cantor Fitzgerald and its synthetic prime brokers, Commerzbank Corporate & Markets and ING, will also be centrally cleared.

Commerzbank Corporate & Markets and ING offer synthetic prime brokerage services to institutional clients, including Cantor Fitzgerald, and Citi provides clearing services to ING.

Citi becomes the first general clearing member of LCH.Clearnet to provide third party clearing services for this market segment.

Alberto Pravettoni, CEO of LCH.Clearnet’s Repo and Exchanges business, said: “We are delighted to be the first CCP to offer central clearing of OTC CFDs and to have worked closely with market participants to develop a solution that is tailored to their needs. By working with CFD providers who meet our criteria for membership, we help investors access the best market price for a trade while benefiting from reduced counterparty risk, collateral efficiencies and cross-margining opportunities between cash equities and CFDs.”

Charles Knott, Director of Cantor Fitzgerald Europe said: “Enhanced protection of client money is core to the continued success of our industry. As such, there’s a growing recognition that over-the-counter contracts should be cleared on transparent trading exchanges and involve a central counterparty.

“We believe that central clearing for the OTC CFD market will eventually be mandatory and clients will benefit from the reassurance that their funds are securely deposited in a segregated account with the central counterparty.

“The launch of our new centrally cleared CFDs is in line with the European commission’s stated aim to increase the proportion of cleared OTC contracts. As an innovative firm, it is natural for us to be at the forefront of developing this new product offering in partnership with such respected counterparties as LCH.Clearnet, Commerzbank and ING.”

For further information:

Andrew Robinson/ Alistair Kellie, Newgate Communications
Tel: +44 207 680 6550

Kamyar Naficy, LCH.Clearnet
Tel: + 44 207 426 3787

Charles Knott, Cantor Fitzgerald Europe
Tel: +44 207 894 8029

Notes to Editors:

CFDs are typically traded over the counter, outside of stock exchanges and other visible platforms, as an agreement between the CFD provider and the client. This relationship exposes the customer to the risk of losing money if the CFD provider becomes insolvent. However, if the trade is centrally cleared, the clearing house provides counterparty risk mitigation to the customer of a provider.

About Cantor Fitzgerald:

The Cantor Fitzgerald Group, a premier global financial services provider at the forefront of financial and technological innovation, has been a proven and resilient leader for over 65 years. The Group offers preeminent capital markets investment banking services covering more than 5,000 institutional clients around the world in institutional equity and fixed income sales and trading and is recognized for its strengths serving the middle market with investment banking services, prime brokerage, and commercial real estate financing. Cantor Fitzgerald also is a leader in advisory and asset management services, gaming technology, e-commerce, and other ventures. Cantor Fitzgerald & Co. is one of 21 primary dealers authorized to trade U.S. government securities with The Federal Reserve Bank of New York. Cantor Fitzgerald's 1,600 employees serve clients through over 30 locations, including major financial centres around the world in the Americas, Europe, Asia/Pacific and the Middle East. For more information please visit www.cantor.com

Cantor Fitzgerald L.P. is the parent company of Cantor Fitzgerald & Co. and Cantor Fitzgerald Europe.

About LCH.Clearnet:

The LCH.Clearnet Group is a leading multi-asset class and multi-national clearing house, serving major exchanges and platforms as well as a range of OTC markets.

LCH.Clearnet’s world-class risk management framework provides exceptional levels of protection to international markets, as has been proven through the management of recent defaults. As demand for robust clearing services continues to grow, LCH.Clearnet is committed to achieving the highest standards of risk management across all asset classes cleared.

LCH.Clearnet is majority owned by London Stock Exchange Group (LSE.L), a diversified international exchange group that sits at the heart of the world's financial community.

For more information on LCH.Clearnet visit www.lchclearnet.com/media_centre.

About Commerzbank:

Commerzbank is a leading bank in Germany and Poland. It is also present worldwide in all markets for its customers as a partner to the business world. With the business areas Private Customers, Mittelstandsbank, Corporates & Markets and Central & Eastern Europe, it offers its private and corporate clients as well as institutional investors the banking and capital market services they need. With some 1,200 branches Commerzbank has one of the densest branch networks among German private banks. In total, Commerzbank boasts nearly 15 million private customers, as well as 1 million business and corporate clients. In 2012, it generated revenues of just under EUR 10 billion with approximately 56,000 employees on average.

About ING:

ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. With a diverse workforce of more than 82,000 people, ING serves over 61 million private, corporate and institutional customers in over 40 countries in Europe, North America, Latin America, Asia and Australia. For more information, visit www.ing.com