FX ON EXCHANGES
Turnover of exchange-traded foreign exchange futures and options have grown rapidly in recent years, reaching $166 billion in April 2010 (double the turnover recorded in April 2007). FX futures contracts were first introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. However, exchange-traded currency derivatives represent only about 4 per cent of the total foreign exchange traded over the counter (OTC) turnover.
Also, OTC derivatives account for almost 90 per cent of the derivatives markets. In December 2009, the notional value of outstanding OTC derivatives was around $615 trillion (€435 trillion). OTC derivatives are used in a variety of ways, including for the purposes of hedging, investing, and speculating. Contrary to derivatives traded on exchanges, OTC derivatives are not automatically cleared through a central counterparty (CCP) or subject to reporting rules.
Rank
Tis all looks set to change. In September 2009, at the G-20 Pittsburgh Summit, the leaders of the 19 biggest economies in the world and the European Union agreed that “all standard OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by the end-2012 at the latest.” Furthermore, they acknowledged that “OTC derivative contracts should be reported to trade repositories and that non-centrally
cleared contracts should be subject to higher capital requirements.”
Most developed countries permit the trading of FX derivative products, like currency futures and options on their exchanges. All these developed countries already have fully convertible capital accounts. A number of emerging countries do not permit FX derivative products on their exchanges in view of controls on the capital accounts. Te use of foreign exchange derivatives is growing in many emerging economies and countries such as Korea, South Africa, and India have recently established currency futures exchanges, despite having some controls on the capital account.
It is with this in mind, that e-Forex launches a new section, FX on Exchanges, to chart the momentum and continued growth of FX trading and clearing, on exchanges.
Contract
Top FX Exchange-traded Contracts Contract Size
1 U.S. Dollar/Indian Rupee Futures, MCX-SX 2 U.S. Dollar/Indian Rupee Futures, NSE India 3 Euro FX Futures, CME 4 U.S. Dollar Futures, BM&F
5 U.S. Dollar/Russian Ruble Futures, RTS 6 U.S. Dollar Futures, KRX 7 U.S. Dollar Futures, Rofex
8 Euro/Indian Rupee Futures, MCX-SX * 9 Euro/U.S. Dollar Futures, RTS **
10 Australian Dollar/Japanese Yen Futures, TFX 11 Japanese Yen Futures, CME 12 British Pound Futures, CME
13 U.S. Dollar-Japanese Yen Futures, TFX 14 Australian Dollar Futures, CME
15 U.S. Dollar Options on Futures, BM&F 16 Canadian Dollar Futures, CME 17 Euro/Japanese Yen Futures, TFX 18 U.S. Dollar Rollover, BM&F
19 Euro/Indian Rupee Futures, NSE India * 20 British Pound/Japanese Yen Futures, TFX 21 Swiss Franc Futures, CME 22 U.S. Dollar Futures, Micex
23 GBP/Indian Rupee Futures, MCX-SX * 24 Shekel-Dollar Options, TASE 25 U.S. Dollar Futures, Turkdex
26 JPY/Indian Rupee Futures, MCX-SX * 27 Mexican Peso Futures, CME
28 EuroFX Options on Futures, CME
29 U.S. Dollar Index Futures, ICE Futures U.S. 30 Peso/U.S. Dollar Futures, Mexder
1,000 USD 1,000 USD
Jan-Dec 2009
Jan-Dec 2010
% Change
224,273,548 821,254,927 266.2% 226,362,368 705,319,585 211.6%
125,000 Euro 54,393,644 86,232,358 58.5% 50,000 USD 1,000 USD 10,000 USD 1,000 USD 1,000 Euro 1,000 Euro 10,000 AUD
46,411,303 NA
12,500,000 Yen 24,853,787 31,862,793 28.2% 62,500 GBP 10,000 USD
22,749,569 30,220,239 32.8% 20,198,781 27,551,634 36.4%
100,000 AUD 16,732,682 25,903,355 54.8% 50,000 USD
100,000 CAD 15,481,166 22,083,807 42.6% 10,000 Euro 50,000 USD 1,000 Euro 10,000 GBP
9,889,564 NA
21,631,255 24,170,975 11.7% 9,961,673 19,921,565 100.0% 17,326,787 NA
15,280,530 19,223,570 25.8% 0
16,266,521 17,108,444 5.2% 10,618,630 12,011,173 13.1% 17,752,959 10,117,886 -43.0% 0
8,067,320 7,927,235 -1.7% 13,687,292 7,095,340 -48.2% 0
7,051,048 NA
4,298,939 6,763,808 57.3% 2,207,616 6,651,318 201.3% 2,523,927 6,369,517 152.4% 1,587,858 5,662,462 256.6%
* Began trading in February 2010 ** Began trading in February 2009. Source: Futures Industry Assocation.
66,776,180 82,453,621 23.5% 8,468,200 81,122,195 858.0% 41,161,819 64,256,678 56.1% 51,107,696 61,729,396 20.8% 0
13,658,237 39,476,420 189.0% 17,793,787 34,272,436 92.6%
116 | april 2011 e-FOREX
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