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SGX: Doing Things Differently “It’s not rocket science, but it is a different approach compared to other exchanges,” says KC Lam, head of FX and rates at SGX, when discussing the exchange’s new FlexC FX futures, which aim to “futurise” certain OTC FX product offerings. This is, of course, a reference to the recent product initiatives launched by various exchange groups in an attempt to bridge the gap between OTC and listed FX trading. While Eurex has launched rolling spot futures, which mimic the trading of OTC FX spot contracts, combined with the daily usage of a tom-next (T/N) swap in order to roll over the value date of the spot position, and CME has launched CME Link, spot FX basis spreads offered on Globex to create a central limit order book (CLOB) between the OTC spot FX and CME FX futures markets, SGX is indeed taking a very different approach.
Five Big Questions Following the CME/NEX Deal Announcement Following the announcement that CME Group is to buy OTC platform operator and post trade services provider NEX Group for $5.4 billion, Galen Stops, raises five important questions that both the parties involved in the deal, and the wider FX market, probably need to consider. Is it good value? Could there be more deals for OTC platforms? Do OTC platforms need scale to survive? Will this deal lead to more futures trading? And does this deal represent competition for LCH?
Bridging the Gap Galen Stops takes a look at the new initiative from the CME that aims to bridge the gap between the OTC and listed FX markets. It’s an old debate in the FX industry – will the market inevitably move towards an exchange model? Indeed, this question was the cover story on a 2001 edition of Profit & Loss.  As part of the response to the financial crisis, regulators favoured pushing more trading activity towards a centrally cleared model, while certain other regulations looked to add extra costs into bilateral trading. All of this led some market observers to predict that more trading activity would shift towards an exchange traded model. 
The FX Tape, What’s Different This Time Round? The consolidated tape for FX launched by FastMatch today looks very different to the one initially proposed by its CEO, Dmitri Galinov. Galen Stops takes a look at what's changed. FastMatch has today announced plans to launch a consolidated tape for FX, something that its CEO, Dmitri Galinov, has been working towards for some time. Profit & Loss previously reported on an earlier proposed iteration of this tape back in May 2016, but the one launched today looks significantly different.
Euronext and FastMatch: the Perfect Combination? As reported earlier, European exchange group Euronext is buying a majority stake in FX ECN FastMatch. Not only is this a deal that has long been rumoured (only the identity of the buyer was unknown) it also appears to be a deal that makes a great deal of sense. Euronext is buying a 90% stake in an FX ECN that is seeing tremendous volume growth – the first four months of 2017 have seen average daily volume of $18.1 billion compared to $11 billion the same time in 2016 – and FastMatch is gaining access to a potentially huge distribution network.
Hotspot: A Fresh Approach Following hot on the heels of its second ownership change in a relatively short time, Hotspot is maintaining the momentum of change by launching new products, specifically outright deliverable forwards. It has also announced a raft of new hires and sought to broaden its geographical footprint. Galen Stops speaks to senior staff at the platform about what these changes - which include the addition of non-deliverable forwards to the platform - are building towards, as well as their view on the changing FX market structure.
Why Have FastMatch Volumes Spiked? There have been some raised eyebrows in the FX industry recently amongst those that have noticed FastMatch’s sudden spike in volumes. Profit & Loss has previously noted FastMatch’s strong start to the year in terms of average daily volumes (ADV), highlighting that in March it reported an ADV of $19.2 billion for the month, a new record high and almost double the $10.1 billion ADV it registered in March 2016. Then in April it set another high water mark in ADV terms, eclipsing March’s record with ADV of $19.8 billion in April, up 83.3% from April 2016.
EBS BrokerTec Leverages New Yuniti Platform to Make a Play in Asia Following a deal inked in mid-2016 with China’s CFETS for electronic execution services in mainland China, EBS BrokerTec has been actively expanding its footprint and relocating key staff to the region. P&L’s Julie Ros talks with Jeff Ward, global head of EBS Direct and head of EBS BrokerTec in Asia, about the moves. Recognising the potential for growth across Asia Pacific, EBS BrokerTec embarked on a growth plan for the region nearly a year ago, as the company was working on a deal
Mapping Out the Plan Neill Penney, co-head of trading at Thomson Reuters, talks to Galen Stops about the recent changes in the firm’s FX business and details how it plans to continue developing it in 2017. There were some significant changes to Thomson Reuters’ FX business in 2016, with one of the most visible being the departure of Phil Weisberg in November, who had headed the FX business at the firm since 2012. With Weisberg leaving “to pursue opportunities outside the firm”, Thomson Reuters has re-structured its management, introducing a new business unit called Trading.
FX Platforms: Optimism Abounds for 2017 Galen Stops looks back at how the OTC FX platforms fared in 2016 and talks to them about their strategic plans for 2017. Speaking to platform providers at the end of 2015 about their prospects for the next year, they were all fairly bullish that a period of subdued volatility, and subsequently trading volumes, was about to come to an end. And on the surface, the reasons they cited for this optimism were logical. The US Federal Reserve had just approved a quarter-point increase in its target funds rate, the first change in rates since 2009 and the first increase since 2006. Many hoped that further rate increases were coming and that interest rate differentials might start to produce trading opportunities and therefore lift FX volumes.