Citi and Eaton Vance Management have cleared the first FX cash-settled forwards at CME Group. CME cleared the two EUR/USD trades on January 15. The exchange group currently offers clearing for 26 currency pairs of FX cash-settled forwards and 11 pairs of NDFs.“CME Group is pleased to clear our first cash-settled forwards, which provide a new capital-efficient way for our customers to trade G10 foreign exchange. This first cash-settled trade, combined with the recent increase in our non-deliverable forward clearing volume in late 2018, allows us to work with our clients, clearing members and liquidity providers to help customers mitigate their risks through cleared solutions,” says Sean Tully, global head of financial and OTC products at CME.
New data from the Futures Industry Association (FIA) shows a 20.2% increase in the number of futures and options contracts traded globally on exchanges in 2018.Futures volume rose 15.6% to 17.15 billion contracts traded, while options volume rose 26.8% to 13.13 billion contracts traded."The rapid growth in derivatives trading on exchanges around the world highlights the value that these products continue to provide for end-users and investors," says Walt Lukken, president and CEO of FIA.
The overall rate of growth was the highest since 2010, when rapid growth in Asia-Pacific and Latin America combined with a recovery in the North American interest-rate sector to produce a growth rate of 26.4%.
The International Swaps and Derivatives Association (ISDA) has published a set of best practices for central counterparties (CCPs), aimed at ensuring greater consistency in risk practices at CCPs across the globe.
The recommendations follow a default at Nasdaq Clearing last September, which exceeded the defaulting member’s margin and default fund contribution and required the use of mutualised resources – the second such event in five years.
The paper highlights steps that can be taken to minimise the potential for a member default to impact other members and the financial system as a whole, except in an extreme stress event.
Traiana is now providing direct central clearing connectivity to the Hong Kong Exchanges and Clearing’s (HKEX) OTC Clearing Hong Kong (OTC Clear).Market participants can now access HKEX’s OTC Clear service to clear USD/CNH and USD/HKD FX forward and swaps, via Traiana’s Clearing Hub (CCP Connect), which provides affirmation, matching and trade processing.The OTC Clear deliverable FX service can be used to mitigate settlement risk that arises when payments and receipts of currencies occur at different intervals during a standard bilateral settlement process. The service can also be used to offset settlement exposure with its clearing house cross currency swaps service.
Seed CX, a licensed exchange for institutional trading and settlement of digital assets, is now offering spot trading.The exchange has opened trading on BTC/USD, while ETH/USD, LTC/USD and BCH/USD pairs will start trading later this month. “There is no shortage of digital asset spot trading markets, but none have our vision for creating an institutional-grade experience across technology, operations and compliance,” says Edward Woodford, co-founder and CEO of Seed CX. “We are getting very positive feedback from recently on-boarded customers, and we are quickly on-boarding more investors and trading firms from around the world.”In September last year, Profit & Loss interviewed Woodford about what it really means to offer an institutional grade platform in the rapidly evolving crypto market.
The Futures Industry Association (FIA) has filed a response to the Basel Committee on Banking Supervision urging the adoption of FIA's suggested modification to the leverage ratio and to recognise the exposure-reducing nature of client collateral in order to align regulatory incentives.
Central clearing of derivatives was a key pillar of the G20 countries response to the post-2008 financial crisis reforms to reduce systemic risk in the financial system, however FIA argues that to date, the leverage ratio’s failure to recognise collateral has had a direct negative impact on the ability of banks to provide clearing services to customers.
Trading on SGX’s FX Futures more than doubled to $914 billion in 2018 as the exchange saw a record monthly volume of $96 billion traded in December.In aggregate, 1.76 million FX futures contracts were traded on SGX in December, up 87% from the same month in 2017. Meanwhile, the notional volume of $96 billion traded on the platform was a 122% year-on-year increase.“The robust annual growth is strong evidence of the role SGX plays as a key risk management venue for market participants as they manage their Asian currency risk exposure,” says the exchange group in its monthly newsletter.
The Bank of England, European Securities and Markets Authority (ESMA), and the US Commodity Futures Trading Commission (CFTC) have all welcomed the decision by the European Commission (EC) to adopt a temporary equivalence regime for central counterparties (CCPs) and Central Securities Depositories (CSDs).
ESMA says it supports continued access to UK CCPs, in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU. It adds it aims to recognise UK CCPs in a timely manner, as long as four recognition conditions under Article 25 of EMIR are met.
Equities analysts at UBS have issued a research report on the merger between CME Group and NEX Group, stating that while they are confident in the potential upsides to this deal, the benefits might not start to materialise for at least a year.
Having previously downgraded CME shares from “Buy” to “Neutral”, the UBS analysts Alex Kramm and John Goode decided to maintain the current rating, with an unchanged 12-month price target of $204 per share. At the time the report was issued, CME shares were trading at $189.51.
Flow Traders has become a liquidity provider for Eurex FX futures products.
Effective immediately, Flow Traders will provide liquidity throughout the whole range of monthly and quarterly deliverable FX futures, as well as in the non-deliverable rolling spot futures offered by Eurex.
Robbert Sijbrandij, head of FX at Flow Traders, says: “As a specialist liquidity provider focused on exchange traded products (ETPs), we welcome the FX futures offering from Eurex, which broadens the reach and potential of listed currencies globally. We believe Eurex rolling spot FX futures will be a great addition to our FX portfolio. Going forward, Flow Traders will provide liquidity in all Eurex FX futures on a continuous basis. We look forward to working with Eurex on this.”