Month: December 2017

Bitcoin: The Next Step

As the cryptocurrency, bitcoin, takes arguably the next big step towards mainstream adoption, Galen Stops takes a look at the different approaches being taken by regulated exchanges towards designing bitcoin contracts and regulators to overseeing them.

Last week, on December 1, three exchanges regulated by the Commodity Futures Trading Commission (CFTC) self-certified new cash-settled derivatives contracts based on bitcoin.

The exchanges – or designated contract markets (DCMs) – are the CME, the CBOE Futures Exchange (CFE) and the Cantor Exchange.

Absa Bank Joins CLS as Settlement Member

Absa Bank has joined CLS Group as a settlement member. 

Absa joins 66 other banks in becoming a settlement member in CLSSettlement, a payment-versus-payment settlement service that currently settles, on average, $5 trillion per day on behalf of its clients.

“I am very pleased to welcome Absa as a direct participant in our settlement service,” says David Puth, CEO of CLS. “Absa has been part of our network since the South African rand was added to CLSSettlement in 2004. This latest development strengthens our presence in South Africa and is further endorsement of our commitment to meeting the evolving needs of our clients.” 

More Venues Report FX Volume Data

Three more trading venues have reported slightly increased FX average daily volume (ADV) for November. Spot FX ADV on NEX Markets (Nex) last month was $82.3 billion, while CME Group reported ADV of 915,000 contracts, which Profit & Loss estimates to be in the region of $90.5 billion in notional value (of which roughly 10% is in FX options products). Elsewhere, FXSpotStream reports ADV of $22.1 billion. All three platforms are up month-on-month but down year-on-year – in the case of FXSpotStream only slightly so.

And Finally…

I don’t believe the words and phrases, “in lunch”, “barrelled”, and “done your boots” are used often enough in today’s foreign exchange industry, however the advent of December allows me to use all three in today’s column, which announces – to the ringing of triumphant bells, widespread disbelief (on your part) and a shaking of the head from my colleagues – the return of my annual accolades – The Irrationals. The first will be unveiled in the midweek issue, but you can join in…

Gain Capital Launches Bitcoin Trading

Gain Capital has joined the growing ranks of retail FX brokers offering Bitcoin trading, with the launch of the functionality on its City Index platform, the company’s FCA regulated service in the UK.
Customers are able to trade the cryptocurrency as either a spread bet or a CFD (contract for difference) – Gain says that it has established liquidity relationships with multiple Bitcoin exchanges, which it uses to create a volume-weighted average price that it claims is “reliable and transparent”.

CME Announces Bitcoin Launch Date, CBoE Self-Certifies

Two exchange groups, CME Group and CBoE, have self-certified new contracts for Bitcoin futures products ahead of a full trading launch.
CME Group has self-certified the initial listing of its bitcoin futures contract to launch Monday, December 18, 2017, while CBoE says its own launch date will be announced “shortly”.
The announcements were noted in a release by the US Commodity Futures Trading Commission (CFTC), which says its staff have held “rigorous” discussions with CME over the course of six weeks, and CBoE over the course of four months.

Chrystal Departs Traiana

James Chrystal has left Nex Traiana, the firm that he co-founded in 2000. 

Although a spokesperson for Nex Group declined to comment on the news, Profit & Loss understands that Chrystal has left the firm, where he was most recently acting as head of exchange traded derivatives. 

Prior to co-founding Traiana in 2000, Chrystal worked at the Chicago Board of Trade (CBOT), joining as a director in its financial markets group in 1987 before being named director for e-trading sales and distribution in 1999.

R5FX, Shanghai Clearing House to Launch FX Trading Platform

R5FX and the Shanghai Clearing House (SHCH) will launch a new electronic marketplace next month, in a move which will enable Chinese banks to directly trade offshore RMB with London for the first time. 

The platform, called Connect, is due to go-live on 18 December – following confirmation from the People’s Bank of China. Eight Chinese banks will be participating from launch, with further banks and institutions to be added at a later date.

The products available for trading in this first phase will be USD/HKD, GBP/USD and EUR/USD. Profit & Loss understands that CNH and the remaining G10 currency pairs may also be added towards the end of Q1 2018. 

Steady FX Volumes Reported by Platforms

The first three platforms to report FX average daily volume (ADV) for November indicate activity stayed around year’s highs.
CBoE FX (formerly HotspotFX) reports ADV of $33.8 billion, a 5.6% increase from October and a 11.2% increase year-on-year.
Euronext’s FastmatchFX reports ADV of $17.8 billion in November, slightly down from October’s $18 billion and 4.1% higher than October 2017, and Gain’s GTX says it handled ADV of $12.2 billion on its ECN and SEF, a 7% increase month-on-month and up 18.4% year-on-year.

15 European Central Banks Sign Up to Global Code

Stating that, “All central banks in the European System of Central Banks (ESCB) are strongly committed to supporting and promoting adherence to the Foreign Exchange Global Code of Conduct, 15 of the ESCB central banks, including the European Central Bank itself, simultaneously issued Statements of Commitment to the Code. By issuing these statements, these ESCB central banks say they are demonstrating that they are committed to adhering to the principles of the Code when acting as foreign exchange market participants.