The worlds premier non US denominated FX execution house is to offer Thailand’s currency for onshore trading. The forward contract will be available to local financial institutions to draw up liquidity on the Asian Tiger via the popular Thomson Reuters matching platform.
Reuters along with EBS have been the two dominant venues for the dealer to dealer market. EBS is strong in USD denominated currencies and Reuters fills the gap amongst GBP and Commonwealth. More exotic pairs including the Thai Baht are gaining coverage as the worlds most liquid asset class (FX) is crossing borders. Most recent reports by the Bank of International settlement claim FX is trading a massive $5 trillion a day.
Thailand has a closed economy for FX traders as the government does not let foreign exchange freely move in and out of the country. After the Asian financial crisis the government segregated the on-shore and offshore market to be in a better position to control currency movements.
Currently the USD/THB is trading at: 30.75 – 30.90.
The contract is used by corporates and asset managers to hedge risk. Average daily trade in the emerging market currency is around $700 million to $900 million.
Thomson Reuters first offered the Thai Baht against the greenback in 2006 and has seen promising results in spot contracts.
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Thomson Reuters also held an event where it awarded local Thai firms:
Best USD/THB Liquidity Provider (from Dealing Spot Matching) Winner: Bangkok Bank PCL
- 1st Runner Up: Standard Chartered Bank (Thai) PCL
- 2nd Runner Up KASIKORNBANK PCL
2. Best Foreign Currency Liquidity Provider (from Dealing Spot Matching) Winner: JPMorgan Chase Bank, N.A.
- 1st Runner Up: The Bank of Tokyo-Mitsubishi UFJ, Ltd.
- 2nd Runner Up: Bangkok Bank PCL
3. Best Foreign Currency Liquidity Provider (from RTFX) Winner: Thanachart Bank PCL
- 1st Runner Up: KASIKORNBANK PCL
- 2nd Runner Up: United Overseas Bank (Thai) PCL
4. Best FX & Interest Rates Contributor Winner: Siam Commercial Bank PCL
- 1st Runner Up: Citibank, N.A.
- 2nd Runner Up: TMB Bank PCL
Thailand holds great opportunity for both institutional and retail FX brokers. Institutional brokers can pitch for the interbank liquidity and trade flow arising in G7 FX by domestic banks and corporates. Retail FX brokers who offer diverse payment methods can target affluent retail investors.