The service went live today in North America and Europe with trading activity initiated by a number of the beta-test banks. ABN AMRO, Bank of America, Barclays Capital, HSBC, Royal Bank of Scotland, Skandinaviska Enskilda Banken, Societe Generale and Fimat International Banque SA were the banks that participated in the successful beta test with clearing services provided by each of the banksâ respective Futures Commission Merchants. It is anticipated that other banks will soon join the service, further expanding the impact of this offer.
"Technology has transformed the FX market and now CME FX on Reuters has the potential to move foreign exchange into a new era by bringing the spot and futures markets together on the leading FX desktop," said Rick Sears, Managing Director, CME Foreign Exchange. "Bank traders, especially those who are not familiar with FX futures, will be impressed with CMEâs depth of liquidity and the size of our market. In February average daily volume in CMEâs FX complex increased 49 percent, to more than 266,000 contracts, with a notional value of $35 billion. We have seen a three-year compound annual growth rate of 112 percent on our CMEÂ® GLOBEXÂ® electronic trading platform to where CME FX now accounts for approximately five percent of the overall FX market."
Mark Robson, Global Head of Treasury and Fixed Income, Reuters, said, "FX volumes will be boosted as we broaden bank access and deepen liquidity for Globex markets. Whatâs more, our approach to the marketplace is open and ensures clearing firms can improve their execution options. Everyone wins. I'd like to thank our pioneer customers and FFastFill for their support during the testing phase and look forward to extending the number and geographic spread of customers quickly, now that we are live."
CME FX on Reuters was launched following a rigorous testing phase conducted over a three-month period. CME FX on Reuters will be available in Asia and Australia later this year with launch events scheduled in the second quarter for Tokyo, Hong Kong, Singapore and Sydney.
"As a market leader in global foreign exchange services, HSBC is delighted to partner with CME and Reuters in the launch of this platform. CME FX on Reuters will improve overall liquidity conditions, increase operational efficiency with straight-through processing and further enhance our ability to provide superior execution and market access to our client base," said Dan O'Sullivan, Head of Spot and Forward Trading, HSBC Bank USA.
"HSBC is constantly seeking innovative ways to access best price and execution for our customers" added Greg Totts, Head of Futures Europe, HSBC Bank plc. "Weâre pleased to be one of the launch partners for CME FX on Reuters as this service will provide us with access to even deeper liquidity pools and enable us to offer comprehensive clearing services to the global FX community."
"Participating in CME FX on Reuters is another step in building our global futures business," said Bill Cleary, Managing Director, Bank of America Futures Inc. "Foreign exchange is one of the fastest growing segments of the futures markets. With bank traders now able to make easy comparisons between the spot and futures markets on the same screen, futures in turn could easily become one of the fastest growing segments of the FX markets."
CME FX on Reuters brings all the advantages and efficiencies of CME futures trading to Reuters Dealing 3000 users. CME FX futures appear in spot-equivalent terms, simplifying usage for cash market participants by facilitating price comparisons between the two markets, potentially bringing greater pricing efficiencies to both. Price displays and trading functionality replicate the look and feel of Reuters spot matching, however users are not required to subscribe to the Reuters spot matching service to utilize CME FX on Reuters. Executed trades can be routed through Reuters ticket output feed for straight-through processing. In addition CMEâs central counterparty clearing eliminates the need for bilateral credit lines, making it easier for banks to trade with non-banks. FFastFill is the first authorized independent software vendor (ISV) to facilitate the order execution and risk management using its hosted solution. New clearing firms may contract other ISVs to support this initiative going forward.
CME offers 36 different foreign exchange futures and 21 options on futures products and received FX Weekâs 2004 eFX award for the best electronic futures platform. Last year, over 51 million FX contracts traded at CME with a notional value of over $6.2 trillion.
Reuters, an international leader in financial information and analytics, serves 328,000 financial professionals worldwide. Reuters Dealing 3000 platform is used by nearly 18,000 FX and money market professionals across 4,000 organizations to trade FX spot, forwards, options and now futures, plus interest rate and overnight index swaps. CME and Reuters previously collaborated in the late 1980s and early 1990s to pioneer electronic futures trading through the original CME Globex system.