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CME initiatives coalesce around spot FX basis spreads

Some six months after its FX Link service went live, CME Group reckons the benefits are being felt beyond the OTC spot FX and FX futures markets.

At its launch in March, CME FX Link was heralded as the first-ever central limit order book between OTC spot FX and FX futures markets, enabling more efficient access to FX futures as part of a wider trading strategy.


Paul Houston,
CME Group

According to Paul Houston, global head of FX at CME Group, the creation of this linkage has already started to improve the ability of market participants to manage market exposures and credit utilization across the two markets.

The offering serves as one of the first electronic central limit order book liquidity pools for managing FX swaps exposures, making it a highly complementary tool for participants in that market, he adds.

When asked to what extent FX Link has enabled non-bank firms to access the swaps market, Houston says it has seen adoption from a range of client segments, inclusive of providing a conduit for non-bank firms to offer liquidity to FX swap market participants in a centrally traded environment.

“More generally, banks and other client segments are attracted by the development of a credit and capital efficient electronic central limit order book to manage FX swaps exposures,” he adds.

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