CME Group’s new FX spot marketplace reported a surge in trading to $1.4 billion in a single day, attracting over 40 active clients within its first month. More than 20 of those clients were reportedly banks that had never previously traded FX futures.
Bridging OTC and Futures to Fill Liquidity Gaps
FX Spot+ uses implied matching technology to enable anonymous trading through a central limit order book. It provides access to more than $100 billion in daily FX futures liquidity
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
Read this Term packaged in spot terms.
“The launch of FX Spot+ has gotten off to a strong start, with the first month of trading seeing participation from a diverse set of global clients with different trading strategies and across the full range of currency pairs available on the platform,” said Paul Houston, Global Head of FX Products, CME Group.
“We’re extremely pleased with the reception for this innovative new platform,” he added. “We look forward to supporting more clients with their first trades, growing the ecosystem, and enhancing trading opportunities in the process.”
Banks that historically limited themselves to traditional spot FX markets are now reassessing their strategies. “FX Spot+ provides spot trading desks with simple access to the FX futures market,” said Michael Driscoll of Commerzbank. Through implied pricing, the platform “enables our spot orders to reach a wider audience,” creating new opportunities for execution
Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co
Read this Term.
Expanding FX Trading Ecosystem
With a promising start and strong institutional interest, FX Spot+ appears well-positioned to expand its role in the FX trading ecosystem.
By offering futures-market depth in a spot FX wrapper, CME Group may have found a formula that appeals to both OTC traders seeking deeper liquidity and futures participants looking to diversify their order flow.
As banks and trading firms look to consolidate liquidity access and reduce risk exposure, CME expects the new platform to shift the structure of FX markets in the months ahead. FX Spot+ offers over-the-counter (OTC) participants direct access to CME’s FX futures market liquidity without having to leave the spot trading environment.
In April, CME posted a notable increase in foreign exchange trading volumes as part of its record-breaking first-quarter performance. The platform’s FX volumes jumped 16.8% year-over-year (YoY) to 1.15 million contracts per day. Following the high volumes, revenue reached a record $1.6 billion, while operating income hit $1.1 billion.