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CME Group receives top awards for FX derivatives and spot

Amid volatility in the Asia-Pacific region (APAC), market participants are taking advantage CME The group’s extensive pools of Effects Liquidity, search for security in times of economic stress

As operator of two of the world’s leading Effects trading venues, CME The Group plays a key role in providing liquidity to the global Effects market and was recently recognized by Effects Markets for this role in the Apac region. EBS Market platform is the primary over-the-counter (Over the counter) Pricing platform for Asian Non-Deliverable Forwards (NDFs) and the contact point for two of the most important spot pairs in the region: U.S. dollar/EUR And U.S. dollar/CNHThe company also operates the world’s largest regulated Effects Futures and options market that is increasingly focused on Asian currencies.

With almost half of its customers based in the Asia-Pacific region, the region is an integral part CME Priorities of the Group. The Company remains focused on improving the quality and quantity of liquidity for Apac clients using its trading venues.

At a time when interest rate differentials between Japan and the US are driving yen volatility, and China and related economies in the region, such as Australia, are facing headwinds, EBS Market and CME Effects Futures and options play a key role in providing Effects Liquidity for customers when the APAC market is under particular pressure.

Paul Houston

Paul Houston, CME group

“Phases of market volatility reinforce the importance of EBSand we continue to invest to ensure the continued health and robustness of the primary trading venue as an important source of pricing and liquidity in Effects Markets,” says Paul Houston, Global Head of Effects at CME Group.

The recent volatile movements in
U.S. dollar/EUR illustrate EBS The strategic role of the market in maintaining resilience and liquidity in the Effects Market that offers participants the opportunity to hedge against risks as events unfold. Indeed, the continued weakening of the yen against the dollar throughout much of 2023 and 2024 – and speculation about mitigating the currency’s decline – has led to significant volatility in the pair.

This was spectacularly demonstrated on April 29, 2024 amid volatile price movements, especially between 12:00 and 16:00 Japan Standard Time, where EBS The market experienced significant activity in spot U.S. dollar/EUR trade, over 70 billion dollars. During this four-hour window EBS The market experienced a significant inflow of orders in U.S. dollar‌/EURwith nearly 850 orders submitted for at least $50 million and a maximum order size of $355 million. Average top-of-book and order sizes across the entire book were about 2.5 times higher than usual, and order entry times were about three times faster.

Similarly, pressure on the yuan since early 2024 has led to an increase in U.S. dollar/CNH Spot volumes. On March 22, 2024, a total value of $24.2 billion was traded – the fourth largest trading day ever for the pair – with 83% of this volume coming from EBS. One month directly NDFs in Asian pairs followed suit, reaching new highs of $13 billion.

“This shows how in times of market stress, Effects Participants take advantage of the fixed liquidity and centralized price discovery provided by a primary trading venue, such as EBS markets,” says Houston. “We continue to see increased activity in Asian currency pairs in spot and NDF Markets due to increased market volatility.”

Stock exchange trading also performed well in 2023. During the year, notable average daily volume records were achieved in Asian currency pairs, with EUR/U.S. dollar Futures exceeded 177,000 contracts with a notional value of around $16 billion, while U.S. dollar/CNH Futures exceeded 1,900 contracts traded with a notional value of $190 million. Average daily volumes in the fourth quarter of 2023 were 126% higher than the run rate in Q3.

Open Interest, which shows the level of open positions compared to the CME Clearinghouse, reached records, driven by the participation of the buyers. In particular AUD/U.S. dollar And U.S. dollar/CNH recorded record positioning in 2023 and in March 2024 EUR/U.S. dollar The futures reached a record open interest month with a notional value of $40 billion.

Investments in new products and services

While market forces contributed significantly to the increased volumes, EBS Market and CME group Effects Futures and options, investments in new products and services also played a role. These investments accelerated customer adoption and cemented the role of futures and options within the global and APAC market. Effects markets.

Important was the change in the minimum price increases for CNH Futures, which was complemented by a strategic program to incentivize market makers and market participants according to their trading volume. This improved CNH Futures liquidity increased, resulting in greater top-of-book depth and tighter spreads.

In 2023 CME The group also started U.S. dollar/CNH Options and additional expiration dates for other option pairs to meet market participants’ needs for more granularity in strike prices. The exchange now offers expiration dates for any day of the week up to two weeks, with additional monthly and quarterly end dates up to two years.

Elsewhere, CME The group implemented a size priority adjustment algorithm on EBS Market for U.S. dollar/TWD NDFs to give preference to orders above a certain size over smaller orders at a certain price level. The move increased inventory at the top of the book and boosted order volume. Given the success of this initiative, the exchange is looking to expand the process to other Asian markets. NDF couples.

CME The group has added new liquidity providers to its block trade and exchange for related position network, allowing clients from the Asian region to access more than 20 liquidity providers during Asian trading hours, resulting in a 64% increase in block trade volume. And to provide greater flexibility in execution, block trade reporting times have been extended to 15 minutes.

But CME The group is not resting on its laurels. The introduction of the Effects The Spot+ product will enable Spot Effects Dealers have access CME group Effects Futures liquidity in Over the counter Spot conditions within an open, transparent central limit order book environment. Effects Futures market users also benefit from expanded access to Over the counter Effects Liquidity.

“We are creating a new marketplace that Effects “The creation of spot and futures markets enables the trading of future liquidity in the form of spot contracts and the representation and trading of spot liquidity in futures contracts,” says Houston.

“This will create an accessible and centralized liquidity pool on both markets, increasing transparency and trading opportunities for clients. This will be a unique offering for CME Group and we are incredibly excited about the opportunities it offers our customers.

“The launch is likely to be particularly attractive to Asian regional banks as it provides access to a new diversified source of liquidity through the same connectivity they use to access EBS Today.”

CME Group became the best trading platform for Effects Derivatives and Best Trading Platform for Spot on Effects Markets Asia Awards 2024.

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