Cboe’s FX volumes in red as markets in wait-and-see mode

abdelaziz Fathi

Exchange operator Cboe Global Markets reported its trading statistics for December 2021, which were mostly flat in both its options and US equities volumes, as well as seeing a wavering performance across FX and futures business.

Demand for Cboe’s versatile products was muted as concerns over the COVID-19 pandemic and uncertainty surrounding Fed policy drove many investors onto the sidelines.

During December 2021, Cboe FX disclosed a total trading volume of $681 billion, down 12 percent on a month-over-month basis from $776 billion in November‎. In a similar pattern, the figure was lower by -5.3 percent year-over-year when weighed against $719 billion in December 2020.

In addition, the exchange’s institutional FX trading venue saw its average daily trading volumes amounting to $29.6 billion in December 2021, down -17 percent month-over-month from $35.2 billion in November 2021.

On a year-over-year basis, the ADV numbers released by Cboe FX, formerly Hotspot, illustrated weaker performance, falling by 9.4 percent when weighed against $32.6 billion a year earlier.‎

Cboe FX turnover crossed the $1 trillion milestone in 2020 amid coronavirus-driven volatility that has shaken awake previously slumbering FX markets. However, activity at major institutional ECNs has been consolidating this year as intense chaos triggered by Covid-19 lost some steam.

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.

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Cboe widens FX market share

Cboe’s foreign exchange franchise saw its market share at a new all-time high of 17.0 percent in the Q3 2021 compared to 15.9 percent in last year’s third quarter.

Despite a challenging cost environment, Cboe’s Global FX posted $14.3 million in net revenue during the third quarter, up 8 percent over a yearly basis. Average daily turnover traded on the Cboe FX platform was $32.4 billion for the quarter, up 7 percent from last year’s third quarter while net capture per one million dollars traded was $2.77.

Cboe FX Markets teamed up in November with the London-based market maker to launch a hosted algorithmic execution service. The connection between XTX Markets and Cboe comes as algo trading as an execution strategy gains popularity with FX traders.

XTX Markets’ Execution Algo will enable Cboe FX users to benefit from its implementation shortfall execution algorithm, which aims to reduce slippage to arrival price. The institutional FX venue has also secured exclusive rights over use of the XTX Algo in the anonymous ECN space.

 

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