e-Forex-Nov-23

FX ON EXCHANGES
There are two clear trends in the listed FX trading
world. Firstly there is growing demand, as evidenced
by the increased volumes for cleared FX and especially
non-deliverable forward clearing shown in the Bank of
International Settlements (BIS) triennial surveys and also its
quarterly FX reviews.
The other trend is that listed FX and OTC trading are
increasingly housed under the same roof. For example,
within Europe there have been mergers and acquisitions
such as CME Group’s purchase of EBS via the acquisition
of NEX Group, LSEG’s purchase of Refinitiv FXAll;
Euronext’s acquisition of FastMatch and Deutsche
Boerse’s acquisition of 360T. And many of the leading
exchanges have put the need for a hybrid trading model
at the forefront of their product development, typified
by the Exchange for Physicals service developed by Eurex
Clearing.
BUILDING CRITICAL MASS
Over the previous few years, Eurex Clearing, the
derivatives arm of Deutsche Boerse, had developed a listed
FX capability. The last time e-Forex magazine spoke to Lee
Bartholomew, global head of fixed income & currencies
derivatives product design at Eurex, the focus for the firm
was on achieving critical mass for its listed FX offering.
“The focus is still on building critical mass,” says
Bartholomew. “We are making good progress on that
front. A number of banks like Goldman Sachs and
UniCredit have gone live and we have three more global
banks in the pipeline, ready to go live before the end of
the year. Alongside 360T, we feel we have a very clean
and compelling offering and we are all set for accelerated
growth in 2024.”
Increasingly, buy-side firms are telling their sell-side
counterparts to set up with Eurex Clearing, says
Bartholomew. “There is a growing realisation within the
fixed income market that listed and OTC trading can
be complementary. That has led to a degree of comfort
among both bank and non-bank liquidity providers
with listed FX and that suits Eurex. We have spent the
last several years doing the heavy lifting and building
out the platform. Now our focus is on activation and
implementing portfolio listing and other activities.”
There is also a realisation among sell-side banks that listed
FX trading is not an adversary to the OTC world. “It is not
about competing with the banks. Increasingly, banks are
looking to segment their trading into high touch and low
touch. By using on-exchange trading for those assets and
NOVEMBER 2023 e-FOREX 49