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Letter to the Editor: A world of differences

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.

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