The Philadelphia Board of Trade (PBOT) and the Chicago Mercantile Exchange (CME) expanded their forex offerings in late August.
The PBOT added four World Currency Futures to its lineup — the Australian dollar (AD9), Canadian dollar (CA9), Japanese yen (JY9), and Swiss franc (SF9). The British pound (BP9) and euro (EU9) began trading earlier this year.
The new futures are U.S. dollar-denominated and represent 10,000 units of the underlying currency (1 million for the yen), the same size as World Currency Options already traded at the PBOT. Daniel Carrigan, Philadelphia’s vice president of new product development, says creating “mirror” contracts between futures and options allows customers to trade foreign exchange in either a securities or futures account.
The CME began trading weekly currency options on its Globex electronic trading platform in early September. Weekly options on the euro, Japanese yen, British pound, Swiss franc, Canadian dollar, and Australian dollar — all trading against the U.S. dollar — are now available virtually 24 hours per day. The options have American-style expiration, meaning they can be exercised at any time.
“The tremendous growth we have seen this year in CME Group’s FX options volume reflects the market’s interest in an effective and efficient electronic execution platform for FX options,” says Derek Sammann, managing director of FX products for CME Group.
Sammann says that in August, 49 percent of forex options traded electronically, compared to 12 percent in August 2006. Also, electronic trading of all options in August 2007 was six times greater than it was a year earlier, and total options volume increased 102 percent.
The CME intends to begin electronic trading of quarterly forex options in late September. The exchange will also allow electronic trading of Horizontal and Risk Reversal strategies on Globex for the most actively traded options.
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