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  • News Desk
  • Jan 9th, 2017
  • Comments Off on New futures may help fill FX credit gap: CME
CME Group said on Thursday it would offer monthly futures contracts on a handful of major currencies from February 27, the latest step by the world's main derivatives exchange to expand its role in the $5 trillion a day market in foreign exchange.

The Chicago-based group's head of FX, Paul Houston, said the expansion of its current quarterly contracts was in response to demand from clients and may help fill a shortfall of funding that has helped cut overall global FX volumes in recent years.

With financial investors running up against limits on the capital they need to hold against over-the-counter currency derivatives trades, industry figures say exchange-based products like those offered by CME are one natural way of filling the gap.

Volumes at CME, while still smaller than those on the spot currency trading platforms run by Thomson Reuters and NEX Group, have risen steadily and now run at around $84 billion a day.

The new contracts include US dollar rates against the euro, yen, British pound and Australian and Canadian dollars as well as the euro against sterling and will allow investors to hedge for four consecutive monthly periods.

"The launch of FX monthly futures is in response to feedback from global customers who want to trade FX futures for the capital efficiencies they bring but require increased granularity to meet their hedging needs," Houston said.

Copyright Reuters, 2017


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