CME Group’s FX Link Hits Record Daily Volume with 82,900 Contracts

CME Group announced on Thursday that the FX Link trading volume peaked on June 16 as 82,900 contracts changed hands, making it a single-day record on the derivatives platform. The notional value of these contracts was more than $7.2 billion.

The latest record surpassed the previous daily volume peak of 77,146 contracts that was recorded on March 10, 2020.

Additionally, the US derivatives platform witnessed a new single-day record for the USD/JPY pair as 26,677 contracts changed hands, representing a notional value of over $2.5 billion. The FX Link average daily volume (ADV) also tripled in June 2022, with over 43,000 contracts being traded every day, compared to nearly 15,000 contracts in the same month last year.

“This milestone reflects growing adoption of FX Link as a tool to manage risk,” Paul Houston, CME Group’s Global Head of FX Products, said on the latest volume record.

“As the world's first anonymous and centralized FX swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term liquidity pool, FX Link allows participants to gain access to alternative pricing of swaps relative to OTC, and benefit from the capital efficiencies which come from using FX futures. As a result of the increased client participation in 2022, top of book spreads have reduced, and we have seen strong growth in order book depth.”

An Instrument in Demand

CME launched FX Link in 2018. It connects the FX futures contract and the OTC FX marketplace, featuring spot FX basis spreads. It aims to offer OTC FX market participants with improved access and utilization of FX futures as part of their overall trading activity.

The offering attracted some of the big names in the industry, including Deutsche Bank which is a major liquidity provider in FX Link.

“We are excited to see market participants leverage FX Link as a source of FX swap liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term,” said Shuo Wu, Deutsche Bank’s Global Head of Forward eTrading.