Hotspot Begins Offering Anonymous Deliverable FX Forwards

Hotspot has
revealed that the first anonymous outright deliverable forward FX transaction
has been executed on its platform.

Hotspot
says that is the first platform to provide outright deliverable forwards on an
anonymous central-limit order book, and that it is also the first platform to
allow prime brokerage clients to post passive quotes.

This is
designed to allow for expanded trading activity from market participants, who
will be able to trade without being forced to cross the bid-offer spread.

Paul
Millward, head of product strategy, and Paul Reidy head of technology,
spearheaded the project, which culminated in a one-month EUR/USD trade, of
$100,000 notional value.

“When we
initially acquired Hotspot, we made a very public commitment to growing the
platform by adding thoughtful, additive functionality, and expanding product
lines commensurate with customer feedback and demand. We also made clear any
enhancements or expansions would fit our overall ethos of improving market
structure for all participants, without compromising the unique dynamics of the
FX market,” says Bryan Harkins, head of US equities and global FX at CBOE.

He
continues; “This first, anonymous forwards trade, initiated over central-limit
order book is a strong example of this approach, and we are pleased our unique
solution, developed in close collaboration with some of our leading customers,
will aid in expanding participation in a growing corner of the currency
market.”

According
to the Bank of International Settlements (BIS), trading volume of outright
forwards rose to $700 billion in 2016, a 3% increase from $679 billion in 2013.

Separately,
non-deliverable forwards (NDFs) are to be formally listed on Hotspot’s swap
execution facility (SEF), previously called Javelin, in the coming weeks.

This
follows the filing of a revised Form SEF with the CFTC on March 31, 2017, which
updated the SEF’s rulebook and set forth technical details of the Hotspot
platform. The process of onboarding participants to trade NDFs is underway,
with trading to start later this year.

Colin Lambert

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