Articles tagged by Futures
Societe Generale Prime Services’ CTA
Indices show positive performance for commodity trading advisors in the two
full days of trading after the UK referendum results – Friday 24 June and
Monday 27 June.
In the immediate aftermath of the result
on Friday, when ...
After a number of years having to take reactionary measures in
response to new regulatory requirements, panellists at Profit & Loss’ Forex Network New York conference expressed
enthusiasm for a new wave of innovation that has the potential to re-shape FX
BM&FBovespa is the latest financial services firm to join the R3 partnership that aims to design and apply distributed and shared ledger-inspired technologies to global financial markets.
The exchange group will join over 60 other financial institutions in the consortium, where it will collaborate on research, experimentation, design and engineering to help develop distributed ledger technology that meets the financial and capital markets requirements for identity, privacy, security, scalability, interoperability and integration with legacy systems.
Consortium members work closely with R3 to develop Corda, its shared ledger platform specifically designed to record, manage and synchronise financial agreements between regulated financial institutions.
New data from Societe Generale Prime Services shows that CTA performance was down across the board in August for its SG CTA indices.
All of the SG CTA indices were in the red last month, with 19 out of the 20 CTA Index constituent strategies ending August negatively.
The SG Short-Term Traders Index produced the lowest returns in August at – 3.41%, despite remaining the strongest performing of the managed futures indices year-to-date. The flagship CTA index also remains in solidly positive territory year-to-date at 2.19%.
Carlo Koelzer, CEO of 360T Group and global head of FX at Deutsche Börse Group, talks to Galen Stops about the importance of building critical mass amidst the changing landscape of the FX market.
Galen Stops: It’s now about one year on from Deutsche Börse’s acquisition of 360T. Can you shed some light about why you agreed to the deal?
Carlo Koelzer: Prior to this deal we were a big trading platform in the market, but a small organisation in comparison to our competitors. When you look at the larger platforms in the market they’re backed by firms like Icap, Thomson Reuters, Bloomberg and State Street, all of whom had larger balance sheets than us.
CME Group will expand its suite of FX derivatives with the launch of six FX monthly futures next month, providing clients with access to the front months of the FX forward curve.
The new contracts are in addition to the existing quarterly futures and will cover EUR/GBP, as well as five major currency pairs against the US dollar: AUD; GBP; CAD; EUR and JPY.
Subject to regulatory approval, the new instruments will be available for trading on CME from 27 February.
The monthly contracts are launching on the pairs where CME is seeing the most activity and demand. Currently the group offers over 90 FX futures and more than 30 FX options.
Former MF Global CEO, Jon Corzine, has been fined $5 million and banned from working as a Futures Commission Merchant (FCM).
The US Commodity Futures Trading Commission (CFTC) announced today that it has obtained a federal court consent order against Corzine requiring him to pay a $5 million civil monetary penalty for his role in MF Global’s unlawful use of customer funds totaling nearly $1 billion and for his failure to diligently supervise the handling of customer funds.
Under the terms of the order, Corzine cannot seek or accept, directly or indirectly, reimbursement or indemnification from any insurance policy with regard to the penalty amount.
CME Group today announced that it intends to close its London-based derivatives exchange and clearing house, CME Europe and CME Clearing Europe, by year-end 2017.
During the coming months, CME Group says that it will work closely with all market participants and regulators to ensure a smooth transition and an orderly wind down of business operations, including the provision of CME Group market alternatives for actively traded products on CME Europe.
"While Europe continues to be a critically important and expanding market for CME Group, with average volumes of more than 2.6 million contracts per day from European clients during 2016, our customers have shown that they prefer to access our global products, deep liquidity and greater capital efficiencies through our U.S. infrastructure," says William Knottenbelt, CME group senior managing director, international.
As the FX market becomes more automated and continues trading faster, the industry needs to implement better controls to prevent disruptive behaviour, says Greg Wood, SVP, global industry operations and technology at FIA.
Drawing on his experience working in both the FX and futures markets, Wood observes that both are fundamentally driven by technology now and are highly automated.
He adds that “with any type of automation you’re going to have increases in speed and your controls have to maintain pace with the other increases in technology, so as the market gets faster, you need to have appropriate controls.”
The US Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against The Bank of Tokyo-Mitsubishi UFJ (BTMU) for engaging in multiple acts of spoofing in a variety of futures contracts.
Specifically, the CFTC finds that BTMU was responsible for spoofing contracts traded on the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), including futures contracts based on United States treasury notes and eurodollars.
BTMU is now required to pay a $600,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing. The CFTC became aware of the conduct through BTMU’s voluntary self-reporting of the wrongdoing.
SGX has released data showing that the total volume of its FX futures contracts grew 74% year-on-year to 759,983 contracts in July, and open interest in these contracts was up 15% YoY to 60,105 contracts as at the end of July.
The renminbi continued to strengthen against the US dollar in July, extending a trend from the previous month. However, the USD/CNH spot market traded in a narrow range resulting in low volatility that also affected overall volumes for USD/CNH futures across various exchanges.
While the total exchange-traded USD/CNH futures contracts traded globally fell 12% month-on-month in July, the volume for SGX’s USD/CNH futures in the month fell by 7.7% to 150,567 contracts.
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.”
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.
As the cryptocurrency, bitcoin, takes arguably the next big step towards mainstream adoption, Galen Stops takes a look at the different approaches being taken by regulated exchanges towards designing bitcoin contracts and regulators to overseeing them.
Last week, on December 1, three exchanges regulated by the Commodity Futures Trading Commission (CFTC) self-certified new cash-settled derivatives contracts based on bitcoin.
The exchanges – or designated contract markets (DCMs) – are the CME, the CBOE Futures Exchange (CFE) and the Cantor Exchange.
At the moment it seems as though literally half the people that I’m speaking to just want to talk about bitcoin, while the other half just want to complain that no one wants to talk about anything except bitcoin.
But all this hype actually could cause problems for bitcoin going forward. For one thing, speaking to the exchanges and other mainstream financial services firms about why they’re launching bitcoin products, the answer is invariably some version of “well there’s tons of client demand for exposure to bitcoin”.
CBOE Global Markets (CBOE) has issued a release hailing the first day of trading on its new and highly anticipated bitcoin futures contract as a successful launch.
“XBT futures posted a strong start in the global trading hours, which began as planned at 5:00 pm CT on Sunday, December 10, 2017,” says CBOE in the release.
The first full day of trading continues today, December 11. At 5:00 pm CT on Sunday, XBT futures opened at $15,000 and 890 contracts were traded by 7:15 pm CT.
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.
CME bitcoin cash-settled futures contracts began trading on Sunday under the ticker “BTC”.
The opening price for the January contract was $20,650, more than $1,150 over the last price on CME’s reference rate. However, by midday Monday the price had fallen to $18,920 and by 5pm EST the contract was trading at $19,500. The bitcoin spot market was at $18,700 at the same point in time.
In total, data from the CME showed that 1,088 bitcoin futures contracts had traded by 5pm EST Monday.
New data from the Futures Industry Association (FIA) highlights the lack of significant growth in the volume of FX futures trading over the past several years.
According to the FIA data, 2.1 billion currency futures contracts were traded in 2017, and while this represents a 302% increase from the 2008 volumes – which is as far back as the FIA data provided goes – this hardly tells the whole story.
The data shows that between 2009 and 2010 the volume of FX futures traded jumped 160%, from 950 million contracts to almost 2.5 billion. What drove this sudden spike in trading volumes?
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.
Speaking at a recent buy side event hosted by Profit & Loss and sponsored by CME Group in New York, Tim McCourt, managing director and global head, equity products and alternative investments at CME Group, talked about the nuts and bolts behind the exchange’s new bitcoin futures contracts.
In a fireside chat about the CME’s bitcoin futures contract – which launched in December when the excitement around bitcoin was spiking and the cryptocurrency was trading at over $18,000 – McCourt was quick to emphasise that the exchange operator is pleased with the performance of these products thus far.
McCourt noted that, “1,500 in ADV [Average Daily Volume] and 1,500 in OI [Open Interest], with 800 accounts and global adoption of the product – these are all very strong indicators of long-term success for a contract, and actually it’s an exception to have reached these numbers so quickly”.
The aggregate volume for SGX FX futures stayed above 1 million contracts, or approximately US$ 53 billion, for the full month, representing year-on-year (y-o-y) growth of 99.3%.
The average daily volume (ADV) of FX contracts traded on the exchange in February was 1.17 million. On a Year-to-Date (YTD) basis, this represents an increase of 123% over the corresponding period in 2017.
SGX’s USD/CNH futures saw a pick-up in activity last month, with 10 successive days of trading in excess of $1 billion, including two consecutive days of trading above $2 billion.
Those of us, me especially, who have been waiting for the e-revolution in FX to hit the swaps markets may have reason for optimism today, although actual hard evidence through results may have to wait quite a bit longer. CME's new FX Link launched this morning in Asia, without much fanfare it has to be said, but launch it did - and it could be the start of a market structure change that we e-FX swaps proponents have been expecting.
CME Group is set to acquire NEX in a transaction valued at £10 per share, consisting of 500 pence in cash and 0.0444 CME Group shares.
The proposed transaction has been approved unanimously by the board of directors of both companies and is expected to close, pending approvals by regulators and NEX shareholders, in the second half of 2018.
"At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally," says CME Group chairman and CEO, Terry Duffy. "As one organisation, we will be able to employ the complementary strengths of each company to serve a wider client base while diversifying our combined businesses across futures, cash and OTC products and post-trade services."
If there’s one thing that has become abundantly clear over the past few years, it is that many OTC platforms have decided that they need to scale their businesses up and out in order to be successful in today’s FX market.
This was made abundantly clear in a press call today when Terry Duffy and Michael Spencer, respectively the CEOs of CME Group and NEX Group, talked about the logic behind their $5.4 billion tie-up.
“Effectively, what we’re building is a bigger supermarket,” said Spencer. “Why do people shop in supermarkets? Because it’s convenient to buy everything in one place.”