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Exchanges & Clearing

CME Launches FX Link to Create OTC/Futures CLOB CME Group says it will launch spot FX basis spreads called CME FX Link on its Globex electronic trading platform. The exchange group says this will create the first ever central limit order book between the OTC spot FX and CME Group FX futures markets. It is expected to launch in Q1 2018 and, CME says, will provide OTC FX market participants with a more efficient way to access and use FX futures as part of their overall trading activity.
First Trades Completed on LCH SwapAgent LCH SwapAgent, a service for the non-cleared derivatives market, says that it has processed its first trades. Citi and Deutsche Bank were the counterparties to the Swiss franc-denominated interest rate swap and euro-denominated inflation swap. The trades were processed through MarkitServ. LCH SwapAgent is available for market participants trading non-cleared OTC interest rate derivatives. LCH says acting as an independent calculation agent, it calculates and enables customers to exchange bilateral margin and settlement payments, without the need for a central counterparty.
Moex Launches FX Fixing Instruments Moscow Exchange (Moex) is now offering instruments to trade at the Moex FX USD/RUB and EUR/RUB fixing prices with clearing and settlement via its clearinghouse, NCC Clearing Bank. The new offering aims to provide Russian and international banks with a hedge against the currency risk of OTC trading in rouble NDF with the net return calculated at maturity as the difference between the forward rate and the Moex fixing rate. The fixing instruments, USDRUB_FIX0 and EURRUB_FIX0, are traded from 10:00-12:15 MSK on days when the Moex USD/RUB FX Fixing and Moex EUR/RUB FX Fixing (Т+0) are computed.
ForexClear Sets New Record in August LCH says that its ForexClear service processed over $1 trillion in notional over the course of August, setting a new monthly record. LCH says ForexClear has seen demand for its NDF clearing service “significantly increase” since the introduction of the uncleared margin rules in September 2016. The service now has 28 clearing members and is seeing growing interest from buy-side clients, according to the clearinghouse. In addition, the service ended August with a record $1.3 trillion outstanding notional and set a new daily record for notional cleared on 29 August, processing over $65 billion.
CME Reduces Minimum Amounts on VQOs CME Group has reduced the minimum order quantity for Volatility-Quoted Options (VQO) ahead of the scheduled launch on August 20. The new minimum amounts are in production at 10 lots in the euro, Japanese yen, sterling, Australian dollar, Swiss Franc and Canadian dollar contracts. In conjunction with this change, CME has also reduced the minimum quantity requirement to trigger a triangulation execution to 10 for all VQO currencies. The triangulation functionality was rolled out by CME last year in an effort to boost liquidity in its FX options products.
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.
LCH and Euronext Agree Derivatives Clearing Deal LCH has signed binding terms with Euronext NV (Euronext) for the continued provision of clearing services for listed financial and commodity derivatives with LCH SA, the Group’s continental European operating subsidiary. The agreement, which is expected to be finalised in Q4 2017, covers the clearing of financial derivatives and commodity derivatives for a period of 10 years. Under the terms of the agreement, LCH SA and Euronext will also work together to achieve a targeted range of reduction in clearing fees of 5% to 15% with effect from January 2019, depending on each specific product and service. The precise quantum of the reduction for allocation to each derivative product line will be refined in consultation with customers.
Deutsche Börse in OTC Trade Reporting Move The Regulatory Reporting Hub of Deutsche Börse Group has launched a partnership with Risk Focus and its software subsidiary, RegTek.Solutions, to help with its OTC trade reporting. Risk Focus will provide key system components for OTC trade reporting solution, including interpretation of instrument details of OTC derivatives submitted in FpML or XML format, as well as a rules engine for applying the regulatory validations, eligibility checks and deferrals. “In the dynamic environment with frequent updates of regulatory details, the approach using a rules engine has already proven to be very useful. OTC trade reporting is one of the backbones of Mifid II, which is going to be effective as of January 2018.