e-Forex-Nov-23

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FX on the Exchanges: Demand grows while work continues to launch new products. FX ON EXCHANGES “The increased volatility of Asian currencies due to divergent monetary policies across central banks, alongside geopolitical and economic uncertainties, have led to heightened risk management and hedging activities across our key SGX FX futures contracts.” VOLATILE MARKET CONDITIONS Alongside the evolving regulatory regimes as a result of UMR and SA-CCR which has led to investors’ increased use of listed FX futures to help reduce capital costs, another headwind for listed FX has been the volatile market conditions, says KC Lam, global head of FX rates at SGX Group. “The past year has seen one of the most volatile global interest rate rises and inflation in recent history,” he says. “The increased volatility of Asian currencies due to divergent monetary policies across central banks, alongside geopolitical and economic uncertainties, have led to heightened risk management and hedging activities across our key SGX FX futures contracts. Notably, activity and liquidity from US and European market participants has been on the rise, with over 40% of SGX FX futures traded in US and European trading hours.” SGX has looked to build on this KC Lam increased demand by launching two new market data offerings – the SGX Trade-Weighted CNY Index that tracks the performance of a basket of five major trading partners of China, and the SGX Trade-Weighted INR Index that tracks the performance of a basket of five major trading partners of India. The exchange has also looking to improve its trading platform Titan to support the increase in products, participants and volumes, including extended trading hours, enhanced risk controls and system safeguards to help market participants manage their trading and clearing positions round the clock. And more recently it has focused on market structure improvements for FX derivatives. These include enabling bait orders in our trade registration system for SGX USD/CNH Futures to improve price discovery and advertise the liquidity available in the marketplace. “This has resulted in tighter top-ofbook quotes especially for longer tenure contracts. This will also help create implied out orders based on an outright together with a spread order, which will increase liquidity across the curve,” says Lam. “To cater to firms that utilise different Trading Codes or brokers to route their orders, we enhanced our Self-Trade Prevention (STP) feature to include a higher level of STP at the Trading Group level (STP-TG); preventing orders from participants that belong to the same STP-TG from matching,” says Lam. “To address feedback from OTC participants wanting to engage in cross-product strategies, we launched USD/INR month-end contracts, making us the only international exchange to offer conventional USD base currency quotes.” “To make it easier for participants to transact in large sizes without impacting the price of the underlying, we implemented the Titan OTC RFQ to facilitate block trades, allowing larger trades to execute more quickly and efficiently. And to enable clients to trade at-reference to an IOSCO benchmark and participants to enter and exit positions based on a single price point with a deep pool of liquidity, we have embarked on delivering the ability to trade at a reference rate,” says Lam. “To enable clients who would like to replicate OTC FX forward positions but using the listed cleared futures format, SGX has introduced FlexC FX futures allowing participants to effectively mitigate counterparty credit risk with the flexibility of retaining bilateral trading relationships. This brings about lower margin costs and capital requirements and at same time enhancing capital and operational efficiencies,” says Lam. Lam also referenced the steps taken to widen the exchange’s international footprint, attract new clients and grow their FX products and services. “As regulatory developments such as Basel III SA-CCR and UMR Phase 6 came into full force, we drove industry discussions locally and globally to educate clients on navigating changing regulations,” says Lam. “We also publish comprehensive educational material on UMR and SA- CCR on our website, including steps on how clients can utilise our derivatives to increase capital efficiency.” Lam also says that the exchange continues its ambition to bridge the FX OTC and futures worlds. “We are the only FX futures exchange in Asia with an OTC FX trading venue and full OTC FX workflow automation. We also launched SGX CurrencyNode, an FX electronic communication network that connects global participants anonymously to unique and deep OTC FX liquidity pools.” 54 NOVEMBER 20<strong>23</strong> e-FOREX
Your gateway to the global FX ecosystem, empowered with cutting-edge technology SGX FX brings innovation to the global FX ecosystem - from accessing wide liquidity pools in both OTC and Futures markets, to customising cutting-edge workflow solutions for the buy and sell-side, our comprehensive offerings are designed to help you stay ahead of the curve. Singapore Exchange sgx.com SGX Group Companies: NOVEMBER 20<strong>23</strong> e-FOREX 55
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transforming global foreign exchang
Page 3 and 4: Welcome to e-FOREX transforming glo
Page 5 and 6: Turning Payment Flows into Revenue
Page 7 and 8: Institutional EMBARK POWERFUL LIQUI
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Page 11 and 12: Evolving with the Market Added Func
Page 13 and 14: Accelerate time-to-trade with LPs &
Page 15 and 16: RECENT EVENT give a few more takeaw
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Page 21 and 22: TRADING OPERATIONS market risk back
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Page 33 and 34: REGIONAL E-FX PERSPECTIVE The MENA
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Page 41 and 42: THE e-FOREX INTERVIEW Eric, you hav
Page 43 and 44: THE e-FOREX INTERVIEW Fred Allatt (
Page 45 and 46: THE e-FOREX INTERVIEW OUR SINGAPORE
Page 47 and 48: THE e-FOREX INTERVIEW (From left to
Page 49 and 50: FX ON EXCHANGES There are two clear
Page 51 and 52: YOUR PIONEERING PARTNER IN INSTITUT
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Page 57 and 58: ASK A PROVIDER When it comes to FX
Page 59 and 60: SPECIAL REPORT Treasury automation
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Page 69 and 70: TRADERS WORKSHOP NOVEMBER 2023 e-FO
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e-Forex-Nov-23

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