A recent Coalition Greenwich report delved into the top trends affecting FX market structure, pinpointing ‘higher cost of accessing credit’, ‘more electronification of trade execution’, and ‘changing credit provision by banks’ as the main drivers.

Particularly from the buy-side perspective, increased use of cleared FX derivates was also a key consideration according to 37% of surveyed respondents. 

Read more – CME Group on the evolving FX futures and options landscape

A study released yesterday by DataHorizzon Research predicted that the foreign exchange software market size – valued at $7.9 Billion in 2022 – will have a market size of $16.4 Billion by 2032 (a compound annual growth rate of 7.6%). 

Drivers of this, according to the research body, includes rising competition among the key players and high technological adoption, further stating: “In addition, high spending on technology is expected to encourage the adoption.

“[…] Large organisations dominate the foreign exchange software market due to high spending capacity.”

Earlier this week, Ganesh Iyer, chief marketing officer at IPC Systems, highlighted that the FX ecosystem’s increasing complexity was down to the rapid proliferation of counterparties, service providers, execution platforms, and products, suggesting that the focus for market participants was firmly on the pursuit of an integrated trading infrastructure.

Iyer explained that the goal is for that technology “to connect all participants in the transaction lifecycle – buy-side firms, sell-side platforms, exchanges and liquidity providers, clearing/settlement systems, market data providers et al”.

In this vein, market participants are demonstrably making moves at an increased pace, the most recent example being buy-side player, Union Investment, executing its first FX futures trade through Deutsche Börse’s 360T and confirming its intention to implement its EMS in a bid to enhance its execution capabilities.

Speaking in an announcement, 360T explained that the fact that regulatory changes have the potential to theoretically increase costs when it comes to trading FX forwards across OTC channels, will likely make its offering increasingly attractive to market participants going forward.

Speaking to The TRADE this week, Christoph Hock, head of multi-asset trading at Union Investment, said: “What’s important for us when executing – not just in FX but all asset classes – is to get the very best outcome for our investors. Not just best execution, also the regulatory requirements. Our goal is to be connected to the very best platforms and have the best breadth of broker firms on this platform, enabling us to play the white keys, the black keys and the pedals of the piano.”

Results from the recent Coalition Greenwich study on this topic, empirically demonstrated that desks are increasingly investing in this space, aiming to enhance trade execution by prioritising data and workflow management in a bid to keep up with the increasingly complex FX markets. 

The study found that of the top five overall investment priorities for FX desks, three relate to the theme of data and two to workflow, with Coalition Greenwich emphasising the link between these two areas, explaining that “data and workflow go hand in hand; without a systematic workflow, it is difficult to actually get the data.”

The TRADE’s recent exclusive interview with Gordon Noonan, head of FX and rates trading at Schroders, delved into the most important elements with respect to these data capabilities in FX products. 

“On the data front, the swaps market continues to remain opaque with forward pricing not as visible as the spot market. Pricing across banks vary materially in the swap space,” said Noonan, who further added that “as trading technology further advances along with the increase in availability of datasets, it has become even more essential for trading desks to leverage these capabilities to improve execution decisions, maximise efficiency and reduce risks.”

Read more – FX derivatives trading can be streamlined through electronification, but data quality must be assured, say experts.

Also speaking to the specifics around technological requirements earlier this week, Iyer asserted: “In the 4.0 technological age, and with an increasingly tech-savvy demographic occupying traditional trading roles, product and service differentiation must tick new – and many – boxes beyond efficient market access. Managed service solutions enable market participants to easily shop around, enabling freedom of choice and unfettered access to best-of-breed components in the trading stack.” 

The post Market participants deep in preparation as FX market changes ramp up appeared first on The TRADE.

Overall, CME, ICE and Eurex posted solid quarterly results, driven in large part by the demonstrably positive correlation between an uncertain macroeconomic backdrop and risk management opportunities.

Exchange and clearing house operator ICE posted a 4% year on year increase in net revenue for Q2 2023, while derivatives marketplace CME reported a double digit increase of 10%. Further, CME’s operating income was up 14% compared to the same time last year, while ICE’s operating income rose by 10%.

For Eurex, the strongest performance came from its OTC clearing, and repo volumes, posting a 23% increase in OTC and nearly double the repo volumes in June at €379 billion.

Both CME and ICE referred to the uncertain macro environment over the last quarter and highlighted the continuing appetite of clients for risk management services from the businesses.

Speaking to this, Jeffrey C. Sprecher, chair and chief executive of ICE, said: “Amidst an uncertain macro environment, customers continue to access our networks to manage risk, consume data and drive workflow efficiencies.” 

For CME, in the face of a “substantial” decline in equity market volatility, the exchange delivered strong equity index average daily volume (ADV) of 6.2 million, and its equity index futures reached a new all-time high Large Open Interest Holders (LOIH) “as market participants continued to embrace Equity Index futures to manage risk during uncertain times”.

The business also posted the second highest quarterly SOFR futures and options ADV, up 154% in Q2. Elsewhere, CME reported that “a flight to liquidity late in the quarter drove Treasury futures OI [open interest] to reach a record 18 million during June,” which it linked to deep and resilient liquidity. 

As well as the macroeconomic factor, Terry Duffy, chair and chief executive of CME, also highlighted the relevance of geopolitical uncertainty and stated that “market participants continued turning to CME Group risk management products and services in Q2, with particularly noteworthy volume increases across [our] interest rate, commodity and options contracts.

“[…] Looking ahead, we will remain focused on delivering value to our clients by helping them navigate through what has become an increasingly unpredictable world.”

Recently, CME and The Depository Trust & Clearing Corporation (DTCC) enhanced their existing cross-margining arrangement to increase capital efficiencies for clearing members which trade and clear both CME Group interest rate futures and US treasury securities.

Earlier in the quarter, The TRADE spoke to Michel Everaert, head of EMEA at CME Group about the impact of market volatility, how best to manage risk exposures, and trends expected to develop within the derivative space.

Read more: Fireside Friday with… CME Group’s Michel Everaert

For ICE, the quarter ended strong with a consolidated net income of $799 million (up from $555 million in 2022) on $1.9 billion of consolidated revenues (minus transaction-based expenses), while the adjusted net income came to $802 million.

Overall, ICE’s exchanges segment revenue increased year on year by 9%, despite the ‘cash equities and equity options’ and ‘OTC and other’ segments both decreasing by 3%.

Additionally, the business reported a 17% increase in its fixed income execution net revenue, whilst its credit default swaps (CDS) clearing increased 26%, and the fixed income data and analytics revenue also rose slightly, by 1%.

Going forward, Sprecher asserted that driving innovation will be a key focus for the exchange to continue to deliver value to stockholders.

In June, ICE integrated its ETF Hub with LiquidityBook’s order and execution management system (OEMS) LBX to offer efficient access to the primary market and more recently, the exchange relaunched the ICE Risk Matching Auction (RMA) product – part of the ICE Bonds’ suite of trading protocols – expanding its fixed income liquidity offering, in response to market demand.

Speaking to the second quarter results, Warren Gardiner, chief financial officer at ICE, said: “This performance is a clear testament to the strength of our strategically diversified business model and to our ability to successfully execute amidst a dynamic macro-economic environment.”

Eurex’s second quarter results demonstrated an overall decrease in total trading volumes, in June a 14% decrease was posted, in May 9% and in April 15%.

The exchange posted decreases in equity derivates, interest rate derivatives, and index derivatives throughout the second quarter.

In equity derivatives the largest drop came in April with a 20% decrease, whilst May was stronger with no difference year on year and a lesser an 11% decrease in June.

Interest rate derivatives decreased by 12% compared to 2022 for June – going from 82 million to 72.1 million traded contracts, while index derivatives decreased by 16% the same month, trading 15.6 million less contracts.

Lee Bartholomew, head of FIC Exchange Traded Derivatives (ETD) product design at Eurex, recently addressed the decline in results for the second quarter of 2023: “In my humble opinion, the numbers do not accurately reflect the overall performance and the hard work put in by the team, our colleagues, the support of our clients, liquidity providers and stakeholders.

“[…] In short, Q2 has had its challenges which I feel the team has done a tremendous job of managing. At the same time, I am not overly cautious about the outlook in H2. I think the business will benefit from the foundations laid in H1, and I am confident that 2024 will reap the benefits.”

It was a busy Q2 for Eurex’s business, with various developments, including the US Commodities Futures Trading Commission (CFTC) approving the Eurex FTSE bitcoin index futures in May, with the business becoming the first exchange to offer bitcoin index futures in Europe.

More recently, Eurex announced its intention to include short-term interest rate (STIR) derivatives into its partnership programme in June, aiming to establish an EU-based viable alternative liquidity pool for trading and clearing EURIBOR futures and options.

The post Results roundup: Derivatives exchanges post Q2 revenue increases amidst macroeconomic uncertainty appeared first on The TRADE.

The BTC/EUR and ETH/EUR futures offered by CME Group are cash settled and traded electronically on Globex and OTC for blocks and exchanges for futures for physical (EFPs) through CME Clearport.

ED&F said the launch of the CFTC regulated futures products marked “institutional acceptance” of the cryptocurrency markets, adding that as the trades are taking place on a regulated exchange, all participants can view the same prices and quotes.

“ED&F Man Capital Markets continues to embrace additional regulated Bitcoin and Ethereum futures contracts,” said Brooks Dudley, global head of digital assets at ED&F Man Capital Markets.

“These new CME Euro-denominated BTC and ETH derivatives are an integral step forwards in cross currency risk management for this asset class.” 

The firm assisted its customers and CME with the first of the futures blocks trades on market open, 28 August.

“The listing of CME EUR denominated pairs exemplifies the expanding options for institutions to trade crypto and is a further example of B2C2 supporting the growth of the trading ecosystem,” said Edmond Goh, head of trading at institutional crypto market counterparty B2C2.

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The ADV figure represents all trading done outside of the US.

Volume increases were a result of the global growth in interest rate and energy products, which were up 54% and 31% respectively.

ADV for Europe, the Middle East and Africa (EMEA) in Q3 2021 reached 3.6 million contracts, an increase of 15% from Q3 2020, driven by increased demand for interest rate and energy products, up 47% and 29% respectively compared to the same window in 2020.

ADV for Q3 2021 in Asia Pacific hit 1.1 million contracts, an increase of 8% from Q3 2020. This reflected a 78% growth in interest rate products and 46% growth in energy products in the region.

Latin America’s ADV reached 119,000 contracts in Q3 2029, an increase of 32% when compared to the same period in 2020.

The growth in ADV in the region was driven by the growth in interest rate products, energy products and equity products, which grew by 117%, 25% and 11% respectively.

CME Group reported that its ADV globally reached 17.8 million contracts during Q3 2021, an increase of 14% over the same period last year.

“In the third quarter of this year, we saw strong interest across our international client base, especially as clients navigated uncertainty and volatility in global financial and energy markets,” said William Knottenbelt, senior managing director and head of international, CME Group. 

“We are committed to continuing to provide a robust, liquid and regulated marketplace for clients to manage their risk around the clock and around the world.”

Earlier this month CME Group launched E-mini Russell 2000 Monday and Wednesday options that would accompany existing options on Russell 2000 futures, including Friday Weekly, End-of-Month and Quarterly options.

New weekly options contracts will increase precision, adding more granularity to trading strategies, allowing Russell 2000 Index exposure to be more fine-tuned, said the exchange.

The post CME Group’s international average daily volume up by 13% year on year appeared first on The TRADE.

The new options contracts will accompany existing options on Russell 2000 futures including Friday Weekly, End-of-Month and Quarterly options.

E-mini Russell 2000 Monday and Wednesday options, similar to the other existing options, will be European-style with a 4pm ET expiry on Mondays and Wednesdays.

The new weekly options will allow participants to trade with more precision, adding more granularity to trading strategies and allowing Russell 2000 Index exposure to be more fine-tuned.

These short-term options will offer greater flexibility to manage high-impact event risk, adding versatility to manage positions.

The options will also allow traders to access E-mini Russell 2000 futures liquidity, which averaged 205,000 contracts traded daily last year.

“As the demand for more short-dated options continues to grow, we are expanding our product suite to allow our clients to hedge or trade with enhanced flexibility around major market-moving events,” said Tim McCourt, global head of equity index and alternative investment products at CME Group.

“Weekly options on our deep, liquid underlying futures contracts also provide market participants with a more cost-effective and efficient toolset to manage risk in the small-cap segment.”

It’s been an eventful month for CME, which had been subject to – though refuted – rumours it would bid for rival exchange Cboe, while the Group also launched a new post-trade services unit in partnership with IHS Markit.

“With around $10.6 trillion in AUM benchmarked against the Russell US indexes, FTSE Russell, in collaboration with CME Group, are committed to continuing to develop the underlying risk management markets in the Russell indexes,” said Ricardo Manrique, FTSE Russell’s head of derivatives strategy.

“The E-mini Russell 2000 options provide a highly efficient and cost-effective way to gain market exposure to US small caps, and this latest expansion of the Russell index derivatives complex on CME reflects both the strength of the FTSE Russell index franchise and the ability of CME Group to meet client needs with innovative solutions.”

The post CME to launch E-mini Russell 2000 Monday and Wednesday options appeared first on The TRADE.

Ray Bencheikh confirmed in a post on social media that he has been appointed global head of data operations for Fenics Market Data starting this month in London.

He joins the firm this month after three years at CME working within the exchange group’s Global Command Centre.

Bencheikh previously worked at NEX Group, formerly ICAP, which CME acquired for £3.9 billion in 2018. He was a former EMEA operations manager at ICAP and managed NEX’s Data Operations and Quality Assurance team globally, ICAP’s former Information Services business.

“I’m excited to start my new role tomorrow at BGC Partners, Fenics Market Data Group… Thanks to all my friends and ex colleagues at CME Group, NEX, ICAP, EBS and BrokerTec for making my time at the firm extremely memorable, sincerely,” Bencheikh said in the post.

CME recently launched a new post-trade services company in collaboration with IHS Markit after confirming plans for the joint venture earlier this year. IHS Markit paid the derivatives exchange a $113 million equalisation payment to purchase 50% of the newly launched entity. Further terms were not disclosed.

Known as OSTTRA, the new company combines CME’s optimisation businesses including Traiana, TriOptima, and Reset and IHS Markit’s derivatives reporting service, MarkitSERV, to offer post-trade service to OTC markets.

The post BGC appoints Fenics global head of data operations from CME appeared first on The TRADE.

He stands back holding the dynamite at arm’s length ready to propel it at his arch rival as he clocks out for the day. However, Sam, tired from a full day of trying to kill Ralph, has other ideas. Briefcase in one hand, Sam walks over to Ralph, extinguishes the stick of dynamite between his forefinger and thumb and says, “It’s too close to quitting time Ralph, let’s pick it up there in the morning.” Ralph drops the extinguished dynamite, smiles and says, “Ok Sam, goodnight.” Sam replies “Goodnight Ralph, pleasant dreams”.

“That was the commodity pit, as soon as you checked out you were all friends again,” says Mike Cavanaugh, managing partner at Regiment Alpha, and former trader at the Chicago Board of Trade (CBOT). “You would be like – hey man, how’s it going you good? I’ll see you on the floor in 10 minutes! I’m going to go get some breakfast. You need some coffee?… Then you get in the pit and you’re saying ‘I’m gonna rip your throat out!'”

Up until the COVID-19 pandemic, the Chicago open outcry trading pits were packed with animated traders and brokers wearing brightly coloured jackets, a chaotic sea of people pushing and shoving. The open outcry system offered a face-to-face auction system, matching buyers and sellers in deals through verbal communication and hand signals. It was established so traders were able to see one another during the period before technology facilitated the rapid rise in electronic trading.

However, when the first peak of the pandemic hit in March last year and all market participants were forced to transition to remote working conditions, Chicago-based derivatives exchange CME Group, alongside other exchanges with open outcry pits, was forced to shut them down. Whether they would re-open was uncertain, with rising concerns around the inefficiency and costs of the open outcry system compared to electronic trading.

It was emotional and nostalgic, but not surprising for many when CME Group confirmed on 5 May it would not re-open the open outcry trading pits following their closure in March 2020. The exchange said that all open outcry pits would remain closed on a permeant basis, except for the Eurodollar options pit, which it opened in August 2020.

The development was the first in a series of long-term effects of the pandemic. Many participants are realising the inefficiencies of transitioning back to the office full-time following their highly successful adjustment to working from home. A study by Greenwich Associates in November predicted that a small minority of traders would return to the trading desk, with only 4% of firms surveyed expecting traders to be in the office every day.

In the case of open outcry trading pits, the pandemic acted as a catalyst to speed up a process of elimination that was already ongoing. The open outcry system has been on a trajectory to extinction since the introduction of electronic trading in the late nineties.

Mike Cavanaugh became a floor trader for CBOT in 1998 and remained there until 2003. Originally founded in 1848 as an organised grain derivatives exchange, CBOT later became the go-to exchange to trade agricultural products.

“To see a fully operational open outcry trading floor, a sea of people – it’s chaos and the first time I saw it, I was like, whoa, what is this place? This is insane,” he says. “It was pure, utter chaos. Imagine the most non-politically correct, vile, filthy work environment you could possibly imagine, and then imagine at the same time it’s filled with the greatest people you could ever meet. I don’t know how to better explain it there.”

Mike’s first day was nothing short of a baptism of fire, entering the trading pit for the first time on the day that New York-based hedge fund Long Term Capital Management collapsed. The hedge fund was initially successful, generating more than $1 billion in investor capital between 1994-1998 with the promise of huge returns from a highly-leveraged arbitrage strategy. The strategies, however, didn’t pan out and the fund began to hemorrhage, sending ripples across the market that almost collapsed the financial system in 1998.

“The opening bell came out and the bonds went limit-up, limit-down, limit-up, limit-down –  there were people laying on the floor. It was just chaos. My mentor took my badge out of my pocket, turned it around so nobody could see my acronym, put it back in my pocket, karate chopped my arm and said: keep your hands down, something’s going down! Emotionally, your first reaction is to be scared, but if you show fear people will be all over you,” says Cavanaugh.

“I looked over and there was a guy laying on the floor and I’m thinking what’s he doing? What’s going on? That was my first two-minute indoctrination into the world of trading. The bond market went crazy. If you were caught on the wrong side of it… the guy laying on the floor had fainted because he had a position on that went against them and he just collapsed.”

Mike left the trading pits in 2003, departing  CBOT to become an account executive for My Futures Online, an online futures and options brokerage. He is now managing partner at proprietary investment fund, Regiment Alpha. To him, the trading pits had been heading in one direction since the introduction of electronic trading. By 2005, just 30% of trading volumes came from open outcry trading.

“The floor was dead in 2004, it just slowly died at an ambulatory pace,” Cavanaugh adds. “When the news came out on 5 May, I was more shocked that it took more than 20 years to close the pits. Look at the London Futures Exchange [LIFFE], that went electronic and in seven days London went from having floor traders to the wealthiest cab drivers in the world.

“It is a publicly traded company and the electricity and air conditioning bill to keep 70 people trading in the pit isn’t worth the expense. [CME Group] may have used the pandemic as an easy way out. It’s probably easier than saying the trading pits are no longer the most efficient way to execute orders and futures.”

Alert and attentive

As the years went by and the portion of on-exchange volumes being executed electronically continued to rise, other events added to the changing attitudes in the pits. Most prominently the merger of the CME and the CBOT to become CME Group in 2006, which saw an exodus of traders leave the pits.

The inefficiencies of the open outcry model had become unavoidable when compared with on-screen trading. The inefficiencies included out trades, which take place when there is a dispute over a trade between two individuals. They are caused by varying scenarios, the most common being when two separate traders think they have bought the same individual order or when there is confusion over the price between a buyer and a seller.

“Sometimes it was difficult to understand what was going on and what was being transacted. You’d have to be very alert and attentive, and you still wouldn’t see everything that happened. But using the trading screen, you see every single trade,” says Farley Owens, president of Trading Technologies, and former clerk and trader at CBOT.

Farley Owens left his graduate job at IBM and moved to Chicago with his college roommate, Harris Brumfield, in 1991 to clerk for him on the CBOT floor in the 10-year treasury futures pit. He left the floor in 1999 to join Brumfield, now the majority shareholder in Chicago-based trading technology provider Trading Technologies (TT), to explore the world of electronic trading.

The introduction of TT’s technology responded to growing demand for globalisation and to trade on multiple exchanges. This was previously a cumbersome process that involved multiple systems and trading over the phone with several brokers. TT’s scope now covers six continents, most recently connecting to the Johannesburg Stock Exchange through an agreement with brokerage Applied Derivatives in October last year.

In the open outcry system Owens says that some of the most successful traders were often the largest ones: “There were definitely advantages to being tall. You needed to be able to get the attention of the brokers. That’s where most of the floor traders were making money and getting the edge if they could spot you or if you had a reputation for being a bigger trader. Someone who could take a large order or a large portion of a big order.

“It was very competitive in the pit, there was a lot of pushing and shoving. There were a lot of ex-athletes and really tall, big guys. It was mostly guys and not many women on the floor.”

Continued support

The Chicago Flood of 1992 lays witness to the tenacity and the audacity of the open outcry trading pits. Repair work on a bridge crossing the Chicago River burst a disused utility tunnel and flooded basements and facilities across the city. The water damage cut off most businesses from their invaluable power supplies. But not CBOT, laughs Owens.

Generators were sourced alongside hundreds of metres of extension cables running up the side of the building and onto the trading floor, plugged in to keep the floor running while the rest of the city experienced a total power blackout.

“They were able to keep the trading floor open and it was insane because it just shows the ingenuity of people in the business. They’re going to find a way to make things work,” Owens adds.

The addiction to finding a way to make things work has driven the need for better efficiency and execution, sourced through technology. As the ongoing movement towards electronic trading has continued, the closure of the pits has become somewhat inevitable.

On 4 February 2015, CME Group announced that because the portion of its futures trading accounted for by open outcry had fallen to just 1%, the futures pits would close on a permanent basis.

Other trading pits globally are also teetering on the edge of closing. Following CME’s more recent decision  to close its pits on 5 May, Cboe Global Markets reopened its trading pits and confirmed they would remain open as long as investors wanted them.

“Cboe plans to continue to support open outcry trading as long as our customers find value in the trading floor’s deep liquidity and execution quality. Our floor brokers play an important role in sourcing liquidity for their customers. We know our customers find utility and value in open outcry trading, especially for executing larger, more complex orders and rely on the floor for price discovery and the deep liquidity provided by our market makers,” said Cboe Global Markets in a statement on 5 May.

In the UK, the London Metal Exchange’s discussion paper on the potential closure of the 144-year-old pits released on 19 January was met with uproar and the exchange later confirmed on 8 June that the open outcry pit would re-open following its closure during the pandemic.

“CME may have laid the groundwork for what becomes a decentralised borderless global financial system, I wouldn’t be shocked if the CME Group didn’t exist in two years. I wouldn’t be shocked if the New York Stock Exchange and ICE aren’t relevant.

“They are centralised exchanges and the world doesn’t like centralisation anymore. It doesn’t trust the people making the money in the exchange settings and in the publicly traded company settings,” concludes Cavanaugh.

The post Farewell open outcry appeared first on The TRADE.

According to the trade body, 2019 was a record year of activity as trading in global exchange-traded derivatives markets surged 13.7% to a record 34.47 billion contracts. Futures volumes increased 12% year-on-year to 19.24 billion contracts, while options contracts rose 16% to 15.23 billion. 

India’s NSE traded 6 billion contracts in 2019, up a significant 58% from the year prior, making it the largest exchange operator. CME Group fell behind NSE with volume in 2019 after reaching 4.83 billion, around the same amount as last year, FIA said. 

Elsewhere, Intercontinental Exchange (ICE) ranked as the fourth largest exchange behind Brazil’s B3, after it saw trading volume fall 9% in 2019 to 2.26 billion contracts, due to lower activity across its exchanges in Europe, the US and Asia-Pacific. Eurex Exchange was listed as the fifth largest exchange by volume, after trading 1.96 billion contracts in 2019, around the same as the year prior.

Regionally, FIA said that exchanges in Asia-Pacific grew the most during the year, and the number of contracts traded across the region’s exchanges totalled 14.49 billion contracts, up 29.1% from last year. At the same time, trading in the US and Europe declined 2.8% and 4.4% respectively.

Finally, open interest reached a new record at the end of 2019 of 900 million contracts, an 8.8% increase on the year prior. Open Interest measures the number of contracts outstanding.

FIA said it compiled the data on volume and open interest from 80 exchanges operated by 52 companies across 34 countries. The group added the statistics are based on the number of contracts traded and/or cleared on these exchanges to avoid potential double counting. 

The post India’s NSE overtakes CME Group as largest derivatives exchange globally appeared first on The TRADE.

Speaking at the Sibos conference in London, the panel comprising banks and electronic trading platform providers discussed the state of liquidity in FX, agreeing that flash crash events are more common today, with retail investors often most affected.

“It depends on the size of the event, but we know that they’re becoming more common and systems are more able to deal with them. While we notice them, and often have to comment on them, it’s more business as usual for us,” said Dmitry Ilyaev, head of spot and eFX trading at Commerzbank.

Neill Penney, managing director and global head of trading at Refinitiv, added that the market is getting better at stopping the dip in a flash crash event sooner and then returning to previous levels, but better understanding is needed of such events so they can be better managed.

“We need better vocabulary and education around flash crashes,” Penney said. “When we see a flash crash event, the central banks want to see the data and are keen to find out what happened. For us running these markets, there’s a forensic phase even in the cases where there may not have been a massive effect on the market. It would be helpful to be able to differentiate the big events, from the smaller ones.”

The panel also discussed the recent Bank for International Settlements (BIS) triennial survey on turnover in OTC FX markets, which found that trading in global markets has surged to $6.6 trillion per day, fuelled by strong growth in FX derivatives trading, particularly FX swaps. Although the panel said they were surprised by the jump in FX swaps trading, they agreed that natural funding is flowing into the swaps market as more people hedge risk through swaps.

Jeff Ward, global head of EBS at CME NEX, highlighted the the swaps market is fairly immature when it comes to technology compared to the spot market, but Christopher Purves, head of FRC strategic labs at UBS, warned delegates that as systems and asset classes become even more intertwined due to electronification, the flash crashes of the future could be much larger and have greater impact.

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John Edwards has been named global head of BrokerTec, the fixed income dealer-to-dealer trading platform, having formerly served as a managing director for BrokerTec in Europe. He will continue to be based in London and report to Seth Johnson, who is remaining with the company in a transition role.  Dan Cleaves also will remain with the company in a transition role, leading BrokerTec North America and managing the platform’s migration to CME Globex. 

Guy Rowcliffe has been appointed global head of Optimisation Services, with responsibility for leading the development of CME Group’s full optimisation portfolio and serving as head of its TriOptima and Reset businesses.

Reporting to Rowcliffe, Joanna Davies will oversee Traiana and the company’s regulatory reporting services. Raf Pritchard will continue to manage TriOptima’s triResolve business line, and Paul Busby will continue to lead ENSO. Rowcliffe will report to Ken Pigaga, who is remaining with the company in a transition role.

Jeff Ward has also been named global head of EBS, the foreign exchange matching platform. Ward formerly served as global head of NDFs and forwards and head of EBS Asia, based in Singapore. He will now be based in London.

In order “facilitate integration”, CME said Andrés Choussy and Peter Weibel also will remain with the firm for a transition period. Tim Cartledge will be departing the company in May.

CME completed its acquisition of NEX Group in a deal valued at £3.9 billion in November last year, forming a combined company for futures, cash and OTC markets. It was announced that the NEX brand would be retired, but CME would continue to operate the markets and optimisation businesses as sub-brands, including BrokerTec, EBS, Traiana and TriOptima.

“By combining the strengths of our two leading organisations, CME Group is uniquely positioned to address the changing needs of market participants worldwide,” CME Group’s CEO, Terry Duffy said at the time.

“Together, we will provide efficient access to futures, cash and OTC markets, as well as post-trade services and data offerings that will further support cost-effective trading and risk management.”

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