It’s nice from Ice, baby
Industry anoraks will not be too surprised by the news that the ICE futures exchange has revamped its FX contracts.
Ice inherited an existing FX suite of products when it took over the New York Board of Trade and its Finex subsidiary in Dublin. These have long offered FX contracts, most notably the dollar index, which is a moderately successful niche product. Activity is said to be around 20,000 contracts a day.
The exchange says it will launch bigger contracts with a nominal size of 1 million units on 11 currencies plus the dollar index in November. These will be fully fungible with its existing products. The launch of the new futures contracts, known as Ice Millions, is being spearheaded by Ray McKenzie, the exchange’s vice-president and head of sales. McKenzie knows the FX futures business inside out, having run one of the largest cash to futures arbitrage teams for years when he worked at Morgan Stanley, before he moved over to the CME, which currently dominates the exchange-traded FX business.
Of course, those of us with half-decent memories will recall that when Eurex US tried to launch bigger contracts to bring it more in line with the OTC market, it failed dismally. But that was not because of any inherent fault in the contracts, but because of poor technology that allowed the then prevalent liquidity arbers, aka the sniping prop shops, to pick off the liquidity providers.