CME Group to launch new spot FX marketplace ‘CME FX Spot+’ in 2024

This platform, set for client testing in the second half of 2024, is designed to bridge the gap between cash market participants and the company’s existing FX futures liquidity.

For the first time, participants in the spot FX market will gain the ability to tap into CME FX futures liquidity within an over-the-counter (OTC) spot environment. This integration occurs in a central limit order book setting to ensure transparency. On the other hand, users of FX futures markets will benefit from expanded access to OTC FX liquidity.

CME FX Spot+ aims to leverage FX Link, a mechanism that facilitates a tradable spread between OTC spot FX and CME Group’s FX futures. This feature is instrumental in connecting liquidity across both trading environments.

Accessibility is a key aspect of CME FX Spot+, as it will be available through the CME Globex network. This includes existing EBS Market Globex connectivity, ensuring that the global EBS spot FX customer base can seamlessly tap into this new and complementary liquidity pool.

Paul Houston, Global Head of FX Products at CME Group, said the integration of futures and spot markets under CME Group enables centralized, accessible liquidity within the traditionally fragmented FX market. Houston believes that CME FX Spot+ will provide access, transparency, and trading opportunities across both spot FX and FX futures markets, ultimately benefiting participants in both domains.

“Alongside our FX futures and our EBS offerings, this new spot FX marketplace – and its unique connection with our FX futures liquidity – is the latest example of how having futures and spot markets at CME Group can support accessible, centralized liquidity within the highly fragmented FX market,” he added.

The CME FX futures and options market has shown notable growth, with an average notional daily volume rising to $81.8 billion in 2023, compared to $76 billion in 2021. This increase suggests that more investors are turning to exchange-traded derivatives as an alternative to over-the-counter (OTC) products. This shift is partly to optimize funding and manage the capital impacts of regulations like SA-CCR (Standardized Approach for Counterparty Credit Risk) and UMR (Uncleared Margin Rules).

In August 2023, CME Group announced the consolidation of its various FX-related businesses into a single unit. This unit comprises FX futures, options, cash, and OTC FX businesses and is led by Paul Houston, who has extensive experience overseeing CME Group’s futures and options business for seven years.