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FX ON EXCHANGES


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with the OTC market and seen growth on both sides.”


Outside the major currency pairs, Rutherford says there has also been more interest in some of the emerging currency pairs, such as the Russian ruble and the Brazilian real, which are seeing steady growth.


Growing capacity


While CME Group is building faster connectivity to the exchange and improving technology, and while high frequency traders have played a significant in the growth in OTC and futures volumes, it is not just about the high frequency traders, but also about growing capacity globally. “Global infrastructures and global technology is an area of significant investment for CME Group. In terms of the client segments where the need for low latency is paramount, the round trip matching time in our matching engine is now 3 milliseconds,” he says.


Te CME Group’s state-of-the-art co-location facility will go live in 2012. Tis is a direct demonstration of the exchange’s commitment to the latency-sensitive segment, and Rutherford says interest has been very strong from clients looking to co-locate with the exchange. Education and knowledge sharing has been at the backbone of CME Group’s innovation and growth throughout its history, and this continues to evolve and update to provide the educational tools needed, such as webinars across all products and segments. “In line with how we are structuring our business globally, we are now providing training that is targeted at our different market segments as well as products,” Rutherford adds. For FX, a recent example is the educational material distributed internally and externally, and also using webinars, was for the launch of CME’s FX volatility contracts.


Next round of growth


Going forward and fuelling the next round of growth, Rutherford says the exchange will continue to look to broadening its currency set, improve contract design to keep in line with market changes. For example, in the CME’s E-micro strategy some currency pairs were amended to align more effectively with the markets. He says: “We are most certainly looking to grow and


118 | april 2011 e-FOREX


improve our FX offering and part of the rationale is to introduce new products that are relevant to the market, that create a robust, transparent trading environment for the good of the market. Te success with the Russian and Brazilian currencies also means we will be looking to the growth areas for more currencies to add.”


And throughout the current regulatory debate, Rutherford says the exchange is working closely with the market and positioning itself as a solutions provider for the OTC FX market, and towards introducing a clearing solution for FX options, forwards, swaps, NDFs and FX spot, that underpins the OTC market as part of the CME Group FX suite.


He says: “We are working with the buy-side and sell-side on a clearing solution that will potentially be an evolutionary step, but purely from an FX trading perspective, there is a need, and a desire, to mitigate counterparty risk in the FX market. FX is well established as an asset class but trading on an exchange provides competitive robust platform, good technology and a global infrastructure with the support of CME Clearing to provide a very compelling package.”


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