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Foreign Exchange

Barclays Capital starts live streaming of Asian NDFs on EBS

Barclays Capital this week began offering live streaming prices of Asian non-deliverable forwards (NDFs) on the electronic interdealer market EBS.

It hopes to encourage the use of electronic venues as a means to clear interbank NDF risk while also bringing new participants to the electronic arena for NDF products.


BarCap is providing streaming rates in Indonesian rupiah (INR), Chinese renminbi (CNY) and Korean won (KRW), and they have joined Goldman Sachs, who began offering prices on the same currency pairs in London in December, and out of Hong Kong last month. It is believed that Deutsche Bank will begin providing NDF prices to EBS next month.


The one-month maturity will be the supported period, and prices will be streamed for market amounts of $1-2 million, at regular interbank spreads. While streaming two-way quotes in one message cannot strictly be done on EBS, it is possible to send a bid and then an offer sequentially in two messages with a millisecond in between.


BarCap will focus on the Asian time zone, given the predominance of NDF trading in that region, and plans to move to other currencies and regions later this year if it is successful in jumpstarting demand in these initial pairs, Tim Cartledge, head of Barx and spot trading, tells EuromoneyFXNews.


“We are seeing strong demand from clients for better electronic NDF support which creates demand from banks for a mechanism to swap NDF risk electronically and automatically between themselves,” says Cartledge. “The market presently lacks venues which have the liquidity to support that electronic risk exchange, particularly in Asian NDFs.”


The increased interbank liquidity should encourage increased turnover in Asian currencies, which, when including CNY, now makes up 12% of global FX turnover, which is about the same percentage as sterling. 

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 FX market turnover (% of total turnover)

 
 Source: Bloomberg, Redward Associates

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