On October 10, 2022, Eurex will start trading new FX futures contracts covering the Brazilian real (BRL), Mexican peso (MXN) and South African rand (ZAR). The launch of the three most heavily traded currencies outside the G10 strengthens Eurex’s position as Europe’s leading FX liquidity hub.
Further developments: Starting October 10th, new #FX #futures contracts will cover Brazilian, Mexican and South African currencies – the three most heavily traded currencies outside of the G10. The #Eurex FX product range now includes 25 currency pairs. More info here: https://t.co/7kZ6gThVwQ pic.twitter.com/EPInhWH1Vn
— Eurex (@EurexGroup) August 17, 2022
A total of five new contracts will be listed covering the following emerging market currency pairs: BRL/USD, MXN/USD, MXN/EUR, ZAR/USD, ZAR/EUR. An accompanying liquidity system will ensure strict pricing and competitive liquidity. The new contracts will be settled in cash in US dollars or euros at expiry. Therefore, clearing members can use their existing infrastructure and do not need to open new cash accounts in these emerging market currencies.
Eurex FX futures are similar to OTC FX forwards but have significantly lower counterparty credit risk (CCR) as financial obligations are guaranteed by Eurex Clearing as the central counterparty (CCP). Given the bilateral margin requirements in OTC trading under the Uncleared Margin Rules (UMR) or the revised capital requirements under SA-CCR, centrally cleared FX futures can offer clients significant advantages over OTC FX forwards in terms of margin, funding, and operations.
Jens Quiram, Global Co-Head FIC Derivatives and Repo Sales at Eurex: “We are observing that more and more firms are falling within the scope of the Uncleared Margin Rules and are looking for solutions to reduce their average total notional amount and their bilateral margin requirements. Listed FX Futures can address these challenges while reducing the overall risk of a portfolio due to Eurex Clearing’s multilateral netting capabilities.”
The Eurex FX offering now includes listed FX futures on 25 currency pairs. When calculating the margins, the entire portfolio is taken into account, which leads to more efficiencies in the collateral to be deposited. Eurex also offers clearing of OTC FX Non-Deliverable Forwards (NDFs) in Asian and Latin American currencies.
Source: Eurex
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