The Chicago Mercantile Exchange (CME) and Reuters launched CME FX on Reuters (www.cmeonreuters.com) on March 14. The launch is touted by both organizations as paving the way for more efficient markets as the first major linkage between sell-side traders in the interbank FX market and electronic CME FX futures markets, where hedge funds and other major buy-side participants play a key role.
The hookup gives the professional interbank community trading spot and forward products on the Reuters platform streamlined access to the most active currency futures market in the U.S.
Buy-side investors are increasingly active in the $1.9 trillion/day foreign exchange market but many lack the size and credit standing to trade with bigger players on the interbank market. Currency trading activity at the CME has been rising steadily and now accounts for around five percent of the exchange’s total volume.
“In February average daily volume in CME’s FX complex increased 49 percent to more than 266,000 contracts, with a notional value of $35 billion,” says Rick Sears, Managing Director of the CME Foreign Exchange.
Reuters and the CME unveiled the arrangement last year and have been conducting tests with several banks including ABN AMRO, Bank of America, Barclays Capital, HSBC, Royal Bank of Scotland, Skandinaviska Enskilda Banken, Societe Generale, and Fimat International Banque SA. CME FX on Reuters anticipates other banks will soon join the service. The new venture now has a Web site: www.cmeonreuters.com.
The CME is also launching options on two of their most popular currency contracts — the Euro FX (EC) and the Japanese yen (JY). More information on these option contracts can be found in our new monthly magazine, Options Trader
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