Cboe FX Volumes in Red as Currency Markets in Wait-and See Mode

abdelaziz Fathi

Exchange operator Cboe Global Markets reported its FX trading statistics for August 2021, which took another step back following an influence of volatility south of the border. Activity at major institutional ECNs has been consolidating over the past three months as intense chaos triggered by Covid-19 lost some steam.

Looking at its total volumes, Cboe’s institutional spot FX platform‎ inked a figure of $636 billion, down 11 percent on a month-over-month basis from $734 ‎billion in July 2021‎. This figure was, however, higher by 5.5 percent year-over-year when weighed against $602 billion in August 2020.

In addition, Cboe FX saw its average daily trading volumes amounting to $28.9 billion in August 2021, down -11.3 percent month-over-month from $32.6 billion in July 2021. This ADV figure is the lowest in more than 12 months.

On a year-over-year basis, the ADV numbers released by Cboe FX, formerly Hotspot, illustrated flat performance, rising by 0.7 percent when weighed against $28.7 billion a year earlier.‎

Cboe FX turnover crossed the $1 trillion milestone in March 2020 amid coronavirus-driven volatility that has shaken awake previously slumbering FX markets. The venue also hit its yearly peak for 2021 in March at $880 billion. Since then, demand for Cboe’s versatile products has been muted as concerns over the COVID-19 pandemic and uncertainty surrounding the FED’s policy drove many investors onto the sidelines.

According to its recent financial results, Cboe Global Markets, Inc. (Cboe: CBOE) collected $350.6 million in net revenue on the second quarter 2021 compared to $296.9 million in the Q2 2020. The solid year-over-year growth primarily reflects notable increases in net transaction and clearing fees, as well as access and capacity fees.

The Chicago-based company has also benefited from a surge in retail investor participation in the markets, offsetting lower institutional demand for Cboe’s proprietary products, such as the VIX volatility index.

In the reported quarter, Cboe’s FX revenue rose slightly to $13.8 million or less than one percent from $13.7 million in the year prior. Cboe’s foreign exchange franchise saw its average daily trading volumes amounting to $32.5 billion for the quarter, up 2 percent from Q2 2020. Net capture per one million dollars traded was $2.71 for the quarter, down 2 percent compared to $2.77 in the previous year.

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