>>> Outstanding currency coverage
CME Group has seen extraordinary growth in the past three years - FX futures have grown by 94% and FX options by 226%. Frances Maguire talks to Roger Rutherford, CME Group’s newly appointed London- based managing director and global head of FX products, about the next round of growth.
Roger Rutherford puts the steady, strong growth of volume in FX and currency products at CME Group down to an increased desire, both on the sell-side and the buy-side, to mitigate counterparty risk. T e franchise built by CME Group in FX means that the exchange has very competitive pricing, deep pools of liquidity, a diverse range of counterparties across all segments of the FX market, as well as benefi tting from the diversity of product range at the exchange – such as fi xed income and equities, alongside agricultural and commodity trades.
He says: “T ere is a multi-asset off ering at CME Group and if agricultural and commodity futures trades have an FX element to them then they too get transacted on our futures exchanges. FX has that diff erentiating factor from the OTC markets.”
He points to the broad range of currency pairs available on CME Group, adding that ECNs tend to have strength in the major currencies only, whereas CME Group has seen strong growth in all currency pairs, and adds that FX options, as risk management and hedging tools, have also seen growth that outpaced the OTC
E-micros on CME (percentages are a comparion with the prior year)
Roger Rutherford
“There is a multi-asset offering at CME Group and if agricultural and commodity futures trades have an FX element to them then they too get transacted on our futures exchanges. FX has that differentiating factor from the OTC markets.”
market last year. According to the BIS fi gures while the OTC FX options market shrank by 2 per cent (from April 2007-2010), the CME Group’s options business grew by 226 per cent in the same period.
“Risk mitigation, good pricing, depth of liquidity, diverse counterparty and good currency coverage have enabled the CME Group to become a very solid leader in the FX marketplace,” Rutherford adds.
Futures and OTC markets
Rutherford says it is the strong relationship between the futures and OTC markets that has fuelled the growth in CME Group’s fl agship FX contract, the Euro futures. “T e futures and OTC markets compliment each other and as we saw volatility in the euro, and increased trading in the OTC cash market in euros, the futures market benefi tted from that as well. T e OTC market benefi ts from our growth and the futures market benefi ts from the OTC growth, so even though the US/euro is generally deemed a commoditised currency pair, it has a good relationship
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