So the latest Bank for International Settlements (BIS) Triennial Central Bank Survey is out and, as Profit & Loss previously reported, the headline figure is that the FX market has contracted in size from $5.3 trillion to $5.1 trillion traded per day over the past three years.
This news seems to have caught very few people by surprise, however the survey shows spot foreign exchange volumes are lower while FX swaps activity has grown considerably, especially in Asian centres and in the yen.
With new data showing that RMB trading grew 81.8% over the past three years, Galen Stops looks at the continued development of the currency and the growth of FX trading in the APAC region.
The growth of Chinese renminbi (RMB) trading in the global FX market has been well documented by a variety of sources, whether anecdotally by traders, logically by economists or quantifiably by trading venues and other data providers.
It was therefore no surprise when the latest Bank for International Settlements (BIS) triennial survey showed that the average daily turnover of RMB has grown from $120 billion in 2013 to $202 billion as of April 2016, an 81.8% increase.
Nobody should be surprised to read that the report into the Sterling flash crash of October 7 found it was likely caused by a “confluence of factors” – initial reports in this publication and others covered a wide variety of potential triggers for the event, all of which were credible.
What has surprised me a little, however, is how I find, having read the report several times, I have as many, if not more, questions – perhaps observations is a better word – than I started with.
These questions and observations can be distilled down into four generic themes and a conclusion – Evaluation; the impact of historical events; the necessary responses and lessons; and Asia.
Following a deal inked in mid-2016 with China’s CFETS for electronic execution services in mainland China, EBS BrokerTec has been actively expanding its footprint and relocating key staff to the region. P&L’s Julie Ros talks with Jeff Ward, global head of EBS Direct and head of EBS BrokerTec in Asia, about the moves.
Recognising the potential for growth across Asia Pacific, EBS BrokerTec embarked on a growth plan for the region nearly a year ago, as the company was working on a deal
Singapore Exchange (SGX) has expanded its US presence, opening SGX America in Chicago.
SGX says it presence in the US will enable it to better serve a growing client base in the region and meet the rising international investor appetite to access and risk manage Asian exposure.
Loh Boon Chye, CEO of SGX, says, “This is an important milestone in SGX’s international expansion strategy and reinforces our status as Asia’s most connected exchange. SGX’s knowledge of the Asian markets, and the diversity of our Asia-linked futures and options will resonate with investors in North America, who are increasingly looking East for growth opportunities across asset classes. A physical presence in the US will also better enable us to develop connectivity with the world’s largest equities and fixed income market.”
Since launching its initial suite of FX products four years ago, SGX has reported consistent growth in this business segment. But can the exchange sustain the momentum going forward? Reporting from Asia, Galen Stops takes a look.
Back in November 2013, Singapore Exchange (SGX) went live with trading for six deliverable and non-deliverable currency pairs: AUD/USD, AUD/JPY, USD/SGD, INR/USD, KRW/USD and KRW/JPY. As Profit & Loss noted at the time, the aim was clearly to establish SGX as the major hub for Asian currency futures trading.
Fast forward four years and it appears that the exchange is well on its way to achieving this ambition, with the star performers in its FX suite being the INR/USD and USD/CNH contracts, the latter of which was launched in 2014.
Singapore Exchange (SGX) set a new volume and open interest records for its USD/CNH futures contract in January.
A total of 297,011 USD/CNH futures contracts with a notional value of $29 billion traded on SGX’s platform last month. This represents an increase of 175% y-o-y and comes after the exchange reported full-year growth in trading on the contract of 270% in 2017 compared to the previous year.
Meanwhile, the daily open interest for this product reached a new high of 31,278 contracts, with a notional value of $ 3.21 billion, on 26 January.
Raj Sitlani, co-founder of IS Prime and managing director of ISAM Capital Markets, sat down with Profit & Loss in Shanghai to talk about the challenges associated with expanding into Asian FX markets and why technology remains the key differentiator for prime-of-primes.
Profit & Loss: So what’s your business focus in Asia?
Raj Sitlani: We have a large market share in Australia but, until recently, never truly had the manpower or the resources to crack the broader Asia market. However, there’s a very big opportunity in the region for us to provide our flagship product – which is a prime-of-prime service with aggregated FX liquidity – and so last year we set up a Hong Kong office through which we can build out our presence in North Asia and China.
Singapore Exchange (SGX), is launching a new product, SGX FlexC FX Futures, with the aim of “futurising” certain OTC FX product offerings.
Targeted for launch on August 27, SGX FlexC FX Futures - developed in consultation with market participants - enable bilateral trades that are privately negotiated with tailored expiration dates to be registered and cleared like a standard SGX FX futures contract. This feature will be available for INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
Michael Syn, head of derivatives at SGX, says: "Access to counterparty credit, especially for tenors longer than spot, is increasingly scarce and expensive in the OTC FX markets.