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Exchanges & Clearing

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.
CBOE to Use Gemini’s Data for Bitcoin Derivatives, Indices CBOE Holdings has agreed a deal with Gemini Trust Company, which will see the exchange group receive an exclusive global license to use Gemini's bitcoin market data for bitcoin derivatives and indices. Gemini is a digital asset exchange and custodian that allows customers to buy, sell and store digital assets such as bitcoin and ether. Gemini is a New York trust company that is subject to fiduciary obligations, capital reserve requirements and banking compliance standards of the New York State Department of Financial Services (DFS).
CME Rolls out Implied Functionality for FX Futures CME Group will introduce implied functionality on six FX futures contracts and all SD calendar spreads to help increase liquidity in the contracts. The changes, which will be effective 24 September, will take place in the euro, yen, sterling, Australian and Canadian dollar and EUR/GBP FX contracts. In an advisory to clients, CME explains that implied functionality utilises bids and offers in both spreads and their outright contracts to provide “the most liquid possible markets with the best possible prices”.
LedgerX Becomes First CFTC-Approved Digital Currency Venue The US Commodity Futures Trading Commission (CFTC) has issued an order granting LedgerX, an institutional trading and clearing platform for digital currencies, registration as a derivatives clearing organisation under the Commodity Exchange Act (CEA). LedgerX will be the first US federally regulated exchange and clearing house for derivatives contracts settling in digital currencies. Under the order, LedgerX will be authorised to provide clearing services for fully collateralised digital currency swaps. LedgerX, which was also granted an order of registration as a Swap Execution Facility (SEF) on July 6, 2017, initially plans to clear bitcoin options.
LCH Sees ForexClear Momentum Clearing house LCH says it is seeing “good momentum” in its ForexClear service heading into the second half of the year. The firm says that as at May 2017 it has now cleared more that $10 trillion in notional value since inception. More pertinently, it says it has cleared more notional value ($3.8 trillion) in the first five months of 2017 than it did in the whole of 2016 ($3.2 trillion). As well as a 200% increase in client accounts in 2017, LCH says 18 May 2017 set a new record for number of trades cleared, with 9,336 processed in a single day.