It is flattering to be remembered by Paul Roby so long after the event (letter, "Begging to differ" April, page 13).
I would not like to adjudicate on who thought of what and when - too many grey cells have disappeared for that. But there have been many variations on the theme [of CFDs - contracts for differences].
For example: non-deliverable spot, traded in the Aussie market before exchange controls were lifted; the CME's rolling spot; and SAFEs (synthetic agreements for forward exchange), a forward FX derivative promoted by the British Bankers Association in 1987 with only mild success.
Paul's suggestion of FENS (foreign exchange net settlement) was tainted, if I remember, by the experience of traders in the market at the time who - to characterize - could get trading limit increases easily by shouting at the chief credit officer.
Today the banks are more aware of the need to be capital- and credit-efficient. With the greater emphasis on credit at all stages of the FX trade we are hopeful that the time has finally come for a spot FX derivative in major currency pairs.
Reuters is working with a range of organizations to bring this about and realize real savings for the marketplace. I hope that we can count on the support of Paul and his colleagues at Royal Bank of Scotland to trade the contract and realize his original ambition.
Bob Blower, market specialist, Reuters
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