Six Firms Join DTCC-Euroclear Collateral Initiative

DTCC-Euroclear Global Collateral, the joint venture of Euroclear and The Depository Trust & Clearing Corporation (DTCC), has announced that the Margin Transit Utility (MTU) collateral settlement infrastructure community has added six more dealers to its roster as it moves beyond its pilot production phase. Goldman Sachs, JP Morgan, Morgan Stanley, Societe Generale, UBS and Wells Fargo have adopted MTU, Global Collateral says, joining over 30 investment management, administrator and custodian firms, including Brandywine Global Investment Management, Fidelity International, Franklin Templeton, Vanguard and Brown Brothers Harriman (BBH) who have adopted the service.
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CME FX Link One Year On – Progress But More to Come

March 25 marks the one year anniversary of the launch of CME’s FX Link, probably the most significant attempt by a market intermediary to establish a bridge between OTC and futures markets. In terms of volumes, as expected the growth has been steady rather than spectacular, although FX Link did hit a new record high on March 7 at just under $2.7 billion notional. Generally speaking the platform is handling average daily volumes in the region of $1-1.5 billion in 2019.
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Seed CX Launches Bitcoin Cash, Litecoin Trading

Seed CX, which through its subsidiaries offers a licensed exchange for the institutional trading and settlement of spot digital asset products, is now offering trading in bitcoin cash (BCH) and litecoin (LTC).Prior to this, Seed CX has offered spot trading in bitcoin (BTC) and ethereum (ETH) and the firm has plans to offer a market for Commodity Futures Trading Commission (CFTC)-regulated digital asset derivatives.“We’re very excited to have started live trading of BCH and LTC,” says Edward Woodford, co-founder and CEO of Seed CX, “and we’ll continue to offer more digital asset pairs in the coming months, giving institutional investors the ability to trade a variety of assets on an exchange that provides the market safeguards and technological infrastructure they demand.”
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CME Flags Bitcoin Growth as Cboe Pulls the Plug

Cboe appears to have conceded defeat on bitcoin futures to cross town rival CME Group with an announcement that it will delist its contract this month. In a release listing new product information, the exchange says its CFE subsidiary, which supported bitcoin trading “is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019”. Cboe adds that CFE is “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading”, continuing that “while it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.”
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LCH Adds Five Currencies to Swaps Clearing Suite

LCH has expanded its non-deliverable interest rate swaps offering to include five additional currencies. Market participants are now able to clear this product denominated in Brazilian real, Chilean peso, Colombian peso, Taiwan dollar and Thai baht.This builds on LCH’s existing non-deliverable interest rate swaps offering of Chinese yuan, Indian rupee and Korean won, launched in April 2018. LCH has cleared over $5.47 trillion of these currencies since going live. Cameron Goh, global head of product, rates at LCH, says: “We’re delighted to be expanding our non-deliverable swaps offering to include these currencies. Our focus continues to be on providing maximum capital and margin efficiencies for the market, and this latest extension is another example of LCH partnering with our customers to extend our cleared product set.”
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FX Options Skews: A Complicated Story

A new research note from CME Group looks at whether FX options skews can be used to predict where certain currencies will move relative to the US dollar.Written by Erik Norland, executive director and senior economist at CME, the research opens by explaining that options markets typically exhibit a skew, but that in different asset classes this skew can be in different directions.For example, Norland points out that out-of-the-money (OTM) put options on equity index futures are usually more expensive than OTM call options because investors fear a sudden decline in stock prices more than a sudden rise. However, the reverse is generally true for options on agriculture products because food buyers are more concerned with a sudden increase in the price of crops rather than a decline.
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FX Trading on SEFs Dips in February

The average daily volume (ADV) of FX traded on Swap Execution Facilities (SEFs) in February was $56.2 billion, down 8.2% month-on-month and down 5% year-on-year.Tullett Prebon was the most used SEF for FX trading last month with an ADV of $17.5 billion. It was followed by BGC, Tradition and GFI, which recorded ADVs of $11.7 billion, $10 billion and $9.8 billion, respectively.After this, the ADV figures trail off rapidly, with NEX, TRSEF and Bloomberg recording $4 billion, $1.7 billion and $1.2 billion, respectively, and all of the other SEFs reporting an average of less than $150 million per day of FX trading on their platforms.
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CME Tweaks FX Options

CME Group is set to change the strike price listing for certain FX options contracts in a bid to offer more granularity.Essentially, the exchange is reducing the number of steps above and below the at-the-money strike, while also reducing the strike increments. So, for AUD/USD, instead of 21 steps at $0.50 increments above and below the at-the-money strike, there will be eight steps above and below at $0.25 increments and then 10 steps at $0.50 increments for all weeklies and front monthly contracts. For non-front serials and quarterly contracts there will be 10 steps above and below the at-the-money strike at $0.50 increments and then 10 steps after that at $1 increments.
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ESMA Grants Brexit Relief to UK-Based Clearing Houses

Following a review of UK-based central counterparties (CCPs) and central securities depositories (CSDs), the European Securities and Markets Authority (ESMA) has announced that in the event of a no-deal Brexit, three CCPs established in the UK – LCH Limited, ICE Clear Europe Limited and LME Clear Limited – will be recognised to provide their services in the European Union. ESMA says it has adopted these recognition decisions in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU.
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SGX Starts 2019 with Record FX Volumes

Trading on SGX’s FX futures hit an all-time in January, with $105 billion in notional value and 1.87 million in aggregate contracts traded. Year-on-year, this represents a 60% growth in terms of notional value and a 30% growth in the volume of contracts traded. Average daily volume (ADV) of contracts traded last month grew to approximately 85,000 contracts from 68,000 in January 2018, while the notional ADV traded per day grew to $4.8 billion in January 2019, up from $3.1 billion the same month the previous year.
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