Day: 14 August 2017

Euronext Closes FastMatch Deal

Euronext has completed the acquisition of 90% of FastMatch, after having received regulatory and anti-trust approvals.

This follows the announcement of 23 May 2017 on the signing of the agreement with the existing shareholders of FastMatch.

In a release issued today, Euronext says that the acquisition is part of its “Agility for Growth” strategy, and that it will diversify Euronext’s top line, accelerate its growth profile and allow the group to extend its “best execution” value proposition to an additional asset class.

SGX Touts 74% YoY FX Futures Growth

SGX has released data showing that the total volume of its FX futures contracts grew 74% year-on-year to 759,983 contracts in July, and open interest in these contracts was up 15% YoY to 60,105 contracts as at the end of July.

The renminbi continued to strengthen against the US dollar in July, extending a trend from the previous month. However, the USD/CNH spot market traded in a narrow range resulting in low volatility that also affected overall volumes for USD/CNH futures across various exchanges.

While the total exchange-traded USD/CNH futures contracts traded globally fell 12% month-on-month in July, the volume for SGX’s USD/CNH futures in the month fell by 7.7% to 150,567 contracts.

LCH Introduces SwapClear Client Account

LCH has introduced a new type of client account within its SwapClear service.

The account allows buy side clients to deliver collateral directly to the clearing house and to retain beneficial title to it. Segregation at an International Central Securities Depository (ICSD) ensures that such securities collateral remains client-specific.

This aims to increase operational efficiency and also eliminates the transit risk arising where a client delivers collateral to the clearing house via its clearing member.

JP Morgan is the first clearing member, and Aviva Investors is the first buy side client, to use this new account type. BNP Paribas and HSBC have also confirmed their readiness to support the new account structure.

Is FX Liquidity Trapped in a Vicious Cycle?

Although Greg Wood, SVP, global industry operations and technology at the Futures Industry Association (FIA), says that technology is increasingly causing FX to trade in smaller sizes, he explains that experience in other asset classes shows that this doesn’t necessarily mean that liquidity is diminishing.

With more trading firms using algorithmic execution tools to slice up large FX orders into smaller amounts to reduce market impact, this could potentially create a cyclical pattern where the amount of small orders going through exacerbates the impact of larger orders, forcing firms to execute in smaller and smaller sizes.

“It is to a degree a vicious circle and to a degree we’ve seen it happen in other asset classes, such as futures and equities,” says Wood.

And Finally…

To great cheers and joy unbridled, today’s column is not about last look! Instead, and I have to stress I am unsure of the answer to this, I thought I would ask the question – should the FX market shut down for a few minutes every day?
At the moment, the admin processes just after the New York close seem a mish-mash that could do with being consolidated across the industry so would a two minute window, during which no trading is allowed, help?