Six years after launching CME Clearing Europe and three years after launching CME Europe, the Chicago-based exchange group has announced that it will shut both operations at the end of this year. Although the move was something of a surprise, Galen Stops discovers there are some compelling reasons why the initiative failed. He asks what went wrong and what does this move mean for CME's remaining European operations as well as the ongoing efforts by its competitors to get a European FX derivatives business off the ground?
Kalahari, a provider of real-time pricing and analytics software for financial markets firms, has launched an FX futures and rates service designed to enable users to benefit from real-time futures versus OTC market arbitrage opportunities.
The service is available to traders via Web browser or via direct feed and is the first in a series of new futures/OTC comparison pricing services planned by the firm this year.
Other instruments planned for launch include: MAC swaps for US dollars, EUR and GBP currencies and gold futures pricing, to coincide with the new contracts being launched on the London Metals Exchange this June – all crossed with the OTC markets – to follow soon after.
CME Group will introduce implied functionality on six FX futures contracts and all SD calendar spreads to help increase liquidity in the contracts.
The changes, which will be effective 24 September, will take place in the euro, yen, sterling, Australian and Canadian dollar and EUR/GBP FX contracts.
In an advisory to clients, CME explains that implied functionality utilises bids and offers in both spreads and their outright contracts to provide “the most liquid possible markets with the best possible prices”.
CME Group says it will launch spot FX basis spreads called CME FX Link on its Globex electronic trading platform. The exchange group says this will create the first ever central limit order book between the OTC spot FX and CME Group FX futures markets.
It is expected to launch in Q1 2018 and, CME says, will provide OTC FX market participants with a more efficient way to access and use FX futures as part of their overall trading activity.
Singapore Exchange (SGX) has announced a new daily volume record for its SGX INR/USD futures contract.
The exchange says it handled a total of 108,417 contracts on 22 September 2017, translating to a notional value of $3.34 billion. The INR/USD is SGX’s most actively traded FX futures contract, and recent volume growth has extended its market share to more than 40%, SGX adds.
SGX also recorded its highest ever daily volume for its USD/CNH on 8 September 2017, with 25,857 contracts traded.
A study published by Greenwich Associates looking at the costs associated with trading FX futures and cash OTC FX products argues that some buy side traders can achieve “significant” savings by using futures over cash.
The firm says it employed a proprietary quantitative model, which calculates the cost of opening, maintaining and closing out a position. To validate key inputs into the model and gather feedback on current demand and pricing, Greenwich says it spoke with 51 FX traders on the buy and sell side.
Following the announcement that CME Group is to buy OTC platform operator and post trade services provider NEX Group for $5.4 billion, Galen Stops, raises five important questions that both the parties involved in the deal, and the wider FX market, probably need to consider. Is it good value? Could there be more deals for OTC platforms? Do OTC platforms need scale to survive? Will this deal lead to more futures trading? And does this deal represent competition for LCH?
Before getting onto today’s theme I have some sad news to impart. Gary Munday, known to so many dealers of a certain generation as a member of the powerhouse Marshalls’ dollar-mark team, died suddenly at the weekend, aged 59.
As I never traded dollar-mark Gary never took my line, but he did my institution’s and he was well-liked by my colleagues who did work with him. My condolences to his family and friends at this very sad time.
Turning to today’s theme, it struck me over the weekend that if ever there was an FX-related example of the triumph of optimism over reality, or hope over expectation, surely it must come in the form of Ice Futures US.