In this week’s podcast, P&L managing editor Colin Lambert takes a look at the week’s news, including a brief look at the month-end Fix and the “Friday phenomena” in liquidity, leading him to describe the overall experience as “not a good look for the market – although he does also ask the question, “has much […]
Tag: FX Link
CME Group has introduced the CME FX Swap Rate Monitor a new tool which calculates the implied interest rate differential for eight currency pairs using tradable pricing data from CME FX futures and the FX Link central limit order book, which is a spread between the OTC FX spot and FX futures. The new tool […]
CME Group says that its FX Link service achieved a record average daily volume of 20K contracts for October, equivalent to $2 billion in notional value and says the growth reflects “the perspective of a growing number of participants that FX Link is a viable proxy for FX swaps and a proven vehicle for macro […]
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.
Paul Houston, executive director, global head of FX at CME Group, talks about practical applications of the exchange’s new FX Link product.
Explaining the genesis of the CME FX Link, which was launched earlier this year, Houston says that two years ago the exchange group was looking for ways to attract more people to its marketplace while also increasing the accessibility of its FX futures. A number of different ideas to achieve this were toyed with – such as creating new, shorter-dated contracts – but ultimately, staff at the CME concluded that it would be best to leverage the exchange’s existing liquidity pool.
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.