FX trading in LATAM grew by 28% in 2023 at CME Group

Rick Steves

Interest Rate and Metals products in LATAM also experienced substantial growth, up by 27% and 24%, respectively.

CME Group, the world’s leading derivatives marketplace, has reported significant growth in Foreign Exchange (FX) trading within the Latin American (LATAM) region.

According to data released by CME Group, the average daily volume (ADV) for LATAM reached a record 176,000 contracts in 2023, marking an impressive 11% increase from the previous year.

FX up by 28%, Interest Rates up by 27%, Metals up by 24%

The key driver of this growth was the remarkable 28% surge in Foreign Exchange products. This surge reflects the region’s increasing reliance on CME Group benchmark futures and options contracts for effective risk management in the face of heightened market uncertainties.

Interest Rate products in LATAM experienced a substantial 27% growth, contributing to the overall ADV record. The report also highlighted the positive trajectory of Metals products in LATAM, with a noteworthy 24% growth. This demonstrates a diversified interest in various asset classes within the region.

It’s worth noting that the global ADV for CME Group reached a record-breaking 24.4 million contracts in 2023, showcasing a 5% increase over 2022. Interest Rate ADV played a significant role in this growth, rising by 16% to reach a record 12.5 million contracts.

Derek Sammann, CME Group Senior Managing Director and Global Head of Commodities, Options & International Markets, noted the importance of CME Group’s offerings in supporting market participants worldwide.

“Market participants across the globe turned to CME Group benchmark futures and options contracts given the heightened need for risk management across every asset class last year. As uncertain market conditions continue into 2024, we remain committed to working closely with our clients outside of the U.S. to access our robust, regulated marketplace with round-the-clock liquidity.”

CME Group consolidating NDF liquidity pools

Last month, CME Group announced a significant development in its foreign exchange (FX) offerings. Scheduled for October 2024, subject to regulatory approval, CME Group plans to consolidate its two non-deliverable forward (NDF) liquidity pools on the EBS Market platform into a single trading venue. This move is poised to create a unified global trading environment, linking market participants across different regulatory jurisdictions.

The merger of these NDF liquidity pools is expected to enhance market efficiency substantially. It will also reinforce EBS’s position as a premier source of centralized liquidity and price discovery for NDFs. This strategic initiative responds to the growing fragmentation and complexity within the global FX market, addressing the need for a globally accessible primary trading venue for NDFs.

EBS Market, a pioneer in electronic NDF trading, introduced trading on a central limit order book for these instruments in 2007. The platform currently allows customers to trade 1-month Asian NDFs, LatAm NDFs, and African NDFs, offering a comprehensive range of options for traders.

Upcoming CME FX Spot+ to launch in H2 2024

Last month, CME Group announced the upcoming launch of ‘CME FX Spot+’, a novel spot foreign exchange (FX) marketplace. 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.

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