Tag: forwards

forwards

Citi, Eaton Vance Clear First FX Cash-Settled Forwards

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.

Industry in Alignment Over CFTC Swap Dealer Rules

There appeared to be a broad consensus in the responses to the Commodity Futures Trading Commission’s (CFTC) proposed swap dealer rules that the Commission should retain the current $8 billion de minimis threshold for swap dealer (SD) registration and that NDFs should be excluded from the threshold calculations.

Since 2012, Commission regulations have stated that market participants will not be considered a “swap dealer” unless they trade over $8 billion per year in aggregate gross notional amount (AGNA). This $8 billion threshold was meant to be a temporary phase-in period, with the threshold ultimately due to be reduced to $3 billion.

Oanda Offers FX Forward Rates to Corporates

Oanda will now offer forward rates to corporate clients around via its Exchange Rates API.

This new data set aims to provide corporate treasurers and finance directors with an accurate, trustworthy view of the forwards market, offering over 360 forward rate currency pairs – which Oanda claims is more than any other currency data feed on the market.

Data is delivered via Oanda’s API and can be integrated into any treasury management system, enterprise resource planning system or billing software solution.

“Having been a trusted source of FX data for more than 20 years, Oanda is uniquely positioned to create a market consensus despite the decentralised treasury market, enabling us to deliver reliable forward rates to our clients.

IS Prime Adds to Agency Execution Offering

IS Prime, part of ISAM Capital Markets, is launching an NDF and forward execution facility within its agency desk.
The firm says its agency execution service leverages its relationships with top tier banks whilst also utilising the technology resources of ISAM’s hedge fund business. It provides mid-tier and smaller banks, hedge funds and voice traders with an anonymous, customised liquidity solution with liquidity from the major market making banks, non-bank LPs and selected ECNs.
“The addition of NDFs and forwards in our agency execution business shows a steadfast commitment to doing all we can to meet our institutional clients’ growing demands,” says Raj Sitlani, managing partner, IS Prime.

Could the Shift to Clearing Alter FX Market Structure?

Although there are clear drivers pushing more FX products into central clearing, this is unlikely to have a significant impact on market structure, says Paddy Boyle, the head of ForexClear, LCH.

“The pressure to clear for banks that are subject to bilateral initial margin rules is very, very high and we have banks who tell us they’ve been cut off by other banks because they weren’t clearing,” he says.

That, explains Boyle, is one of the negative drivers towards central clearing, while on the positive side there are lower capital costs, lower initial margin requirements and fewer credit line restrictions for firms that choose to use clearing services. As a result, Boyle predicts that cleared FX volumes will increase “pretty significantly” going forward.

Built to Become Big

Galen Stops takes a look at how and why Aston Capital Management is planning to scale up following its recent $100m investment. 

Aston Capital Management recently received an injection of $100 million in AUM and an additional $5 million in seed operating capital from private investors.  Following this investment, the firm’s CEO Isaac Lieberman is, perhaps unsurprisingly, bullish about its future.

“We have a goal through our strategic mandate and product development timeline to have capacity to be managing $2 billion in AUM within two years and I can actually see us achieving this goal quickly as this business accelerates,” he says.

To help achieve this goal, Lieberman has deliberately been structuring the firm so that it can easily scale up in the future. For starters, the firm has been getting a whole slew of regulatory and accountancy registrations in place.

Redline Supports FX Forwards, NDFs on Cboe Platforms

Redline Trading Solutions has announced support for outright deliverable foreign exchange (FX) forwards traded on Cboe FX Markets and non-deliverable FX forwards (NDFs) executed on Cboe SEF.

This means that firms that are FX clients of Cboe using Redline’s InRush Market Data Ticker Plant and Order Execution Gateway can now receive market data and execute FX forwards on Cboe FX and NDFs on Cboe SEF via a single server.

“We are seeing significant interest in NDFs on Cboe SEF from our customers, and we are excited to be among the first providers to integrate with Cboe’s new venue,” said Mark Skalabrin, CEO of Redline.

CLS Volumes Tick Up in November

The average daily volume (ADV) of trades submitted to CLS was $1.677 trillion in November, up 3.8% from the previous month and up 9.2% year-on-year.

This increase in volumes was largely driven by swaps trading. CLS reports an ADV of $1.149 trillion in swaps submitted last month, which represents a 5.4% increase from the $1.09 trillion submitted in October and a 22.6% increase on the $937 billion submitted in November 2016.

Meanwhile, the ADV for FX spot submitted to CLS was $439 billion in November, up 2.8% from the previous month, but down 14.6% year-on-year.

Forwards represented $89 billion of the total ADV submitted to CLS in November, down 10% from October but up 4.7% compared to November 2016.

Is the Stage Finally Set for FX Clearing?

Galen Stops takes a look at whether the predictions of FX moving towards a centrally cleared model might finally be coming true. 

Central clearing for FX has endured a number of false dawns in recent years. As long ago as 2011, Profit & Loss published an article, “FX Clearing – Are You Ready?” in which it was argued that Dodd-Frank was likely to drive FX options and NDFs products into clearing.

Then back in the first quarter 2014, staff at the US Commodity Futures Trading Commission (CFTC) indicated that the guidelines for the mandatory clearing of FX derivatives products, which included NDFs could be finalised within weeks. Indeed, Profit & Loss reported in mid-June 2014 that the CFTC was poised to fire the starting gun for mandatory FX clearing.

CLS Volumes Up Double Digits in September

The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017.

This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month.

The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016. The average daily traded volume submitted to CLS was $1.75 trillion in September, up 10.7% from $1.58 trillion in August 2017.

This increase is consistent with data that has already been reported by various FX platforms, which all showed a substantial increase in trading activity last month.

The ADV of swap activity submitted to CLS was $1.14 trillion in September, up 8% from August and up 16% compared to September 2016.