Galen Stops takes a look at the new initiative from the CME that aims to bridge the gap between the OTC and listed FX markets.
It’s an old debate in the FX industry – will the market inevitably move towards an exchange model? Indeed, this question was the cover story on a 2001 edition of Profit & Loss.
As part of the response to the financial crisis, regulators favoured pushing more trading activity towards a centrally cleared model, while certain other regulations looked to add extra costs into bilateral trading. All of this led some market observers to predict that more trading activity would shift towards an exchange traded model.