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Exchanges & Clearing

Report Shows Growth in FX Derivatives Market…Or Does it? The World Federation of Exchanges (WFE) has released a new report showing that trading in currency derivatives grew 10.4% year-on-year in 2016, but this figure doesn’t quite tell the whole story because the driver of the WFE’s well-spun report how the data is measuring the number of contracts traded and not their notional value – it is also heavily skewed by certain domestic factors that, while giving the impression of a growing global market, actually have little or no impact internationally
CME Europe, CME Clearing Europe to Shut by Year-End CME Group today announced that it intends to close its London-based derivatives exchange and clearing house, CME Europe and CME Clearing Europe, by year-end 2017. During the coming months, CME Group says that it will work closely with all market participants and regulators to ensure a smooth transition and an orderly wind down of business operations, including the provision of CME Group market alternatives for actively traded products on CME Europe. "While Europe continues to be a critically important and expanding market for CME Group, with average volumes of more than 2.6 million contracts per day from European clients during 2016, our customers have shown that they prefer to access our global products, deep liquidity and greater capital efficiencies through our U.S. infrastructure," says William Knottenbelt, CME group senior managing director, international.
Amundi Live on CDSClear Clearing house LCH has announced that its first European buy-side client is now live on CDSClear with Amundi now clearing credit default swaps (CDS) at via its clearing broker BNP Paribas. LCH says it has seen activity on its service grow significantly in recent months and that CDSClear now has 13 active clearing members. From Q2 2017, end-users trading CDS will be able to connect via two additional clearing brokers, which will be offering clearing through LCH SA, the firm adds.
SGX Must Improve Operational Resilience – MAS The Monetary Authority of Singapore (MAS), has directed the Singapore Exchange (SGX) to implement measures to enhance its recovery processes and operational resilience. The directive comes after a supervisory investigation into the trading disruption that occurred in the market on 14 July 2016. The measures include recommendations by the Industry Working Group (IWG), which comprises SGX and industry stakeholders. SGX will contribute $1.5 million to co-fund the costs that may be incurred by brokerage firms to implement the IWG measures.
Eris Launches New Market Data Product Eris Exchange has launched a new market data product, Live Eris Swap Curve, which offers real-time valuations and analytics for Eris Standard Swap Futures.
CME to Change FX Option Expiry Process CME Group says it will change the exercise and assignment rules for all options on FX futures contracts. On March 24, CME will amend how it handles options that end up precisely at the money on expiry. Currently, CME options that are at least one tick in or out of the-money at expiration are automatically exercised or assigned, and if the final underlying price happens to occur exactly at a strike price, both calls and puts at that strike are also expired without exercise.
CBOE Closes Bats Acquisition CBOE Holdings (CBOE) announced the completion of its acquisition of Bats Global Markets yesterday Tuesday, February 28, in a cash and stock transaction valued at approximately $3.4 billion (based on the closing price of CBOE shares on February 28). The combined company also announced its new corporate leadership structure, which includes key members of both CBOE’s and Bats’ executive teams. As previously announced, Tilly will serve as chairman and CEO, while Chris Concannon, formerly CEO of Bats Global Markets, becomes president and COO of CBOE Holdings. Within the FX realm, Bryan Harkins was named head of US equities and global FX, a role he took on following the departure of Bill Goodbody in January.
CME Introduces “Triangulation” to Boost Options Liquidity CME Group has gone live with the “triangulation” of its volatility quoted FX options (VQO), a new system that links the VQO, premium quoted options (PQO) and futures books in order to boost liquidity. VQOs, which were launched on November 14, allow market participants to quote the standard 2:00pm expiration contracts in annualised volatility terms. When using a VQO, once a trade occurs the implied volatility input is converted into a USD premium using a standard options pricing model and the participants exchange a standard premium option and a delta hedge of standard underlying futures. This enables market participants to trade in volatility and clear in premium.
CME Amends Rules for Physical Delivery of FX CME Group has changed its rules regarding FX delivery, putting a cap on the amount of deliverable FX that firms can clear via wire transfer when trading deliverable currency products on its platforms. Currently, under CME Rule 730 deliverable currency futures contracts are required to be physically delivered through CLS where both the trading unit and price increment currency are supported by CLS delivery procedures, unless the clearing firm’s delivery exposure in any single contract is not expected to exceed $25 million.
Eris Continues Expanding with Harrington Hire George Harrington has joined Eris Exchange, which offers cash-settled swap futures as an alternative to traditional OTC swaps. In his new role Harrington will lead the completion of on-boarding critical support providers for clearing, order management and execution. Eris Exchange says that he will be instrumental in rounding out its client offering and making its swap futures products more easily available to OTC swap users. Harrington was formerly head of Bloomberg Global Markets, where he was responsible for the overall strategy and delivery of FIT, FXGO and EMSX.