CME to offer spot forex trading in 07

Discussion in 'Forex' started by TradersLog, Jun 14, 2006.

  1. cme and reuters are teaming up to offer the first centralized spot fx marketplace, using globex technology. will they be able to provide the liquidity? is this going to be like eurexus?
  2. Virtually you're saying another broker will be born 2007.
  3. my understanding is that the current forex dealers such as fxcm 'bucket' the trades and go to the interbank market. here trades would be matched and cleared using cme technology, just as eminis are now. if they can get the liquidity, this should create a more efficient market I am assuming....maybe also a big threat to the retail fx dealers out there, have to wait and see

    would be interested in hearing a counter argument to this....
  4. dealer


    my understanding is that to access this you would need to be trading via something like a reuters terminal. which by definition means it is targetted at banks and other financial institutions.

    there was a discussion about this back in May -search the archives.
  5. The futures magazine article states that Interactive Brokers will offer access to it (fxmarketspace) - so I think it will not be limited to institutional traders...
  6. dealer


    Haven't seen the article, but from what you say, I stand corrected.

    Hopefully it will offer access to currency pairs OTHER than those that already actively trade on IMM.
  7. What I don't understand is why the existing currency pairs traded as futures on globex don't see more volume.

    The tick value is higher, no spread (only commission). But it seems EC and BP are the only two pairs that see any decent volume.

    For many short-term strategies, the higher the tick value is compared to commission or spread, the less you have to pay to the broker and exchange to play . All else being equal, this is something of an edge.

  8. Historically there are at least 3 very big reasons fx and futures have not worked.

    They require margin and this costs. All decent sized banks have huge spot lines for one another which require no margin. Why switch your trading to a place where you have to put up margin?

    They have been forward rather than spot prices although the recent changes have tried to overcome this.

    If it isn't broken don't fix it and also changing long held habits without a very good reason is not easy.