Interest in trading emerging markets currencies has increased in recent months due to rampant volatility. The Thai baht is the latest EMFX currency in focus for the former financial and risk business of Thomson Reuters, Refinitiv.
The company revamped its offering as it started sourcing Thai baht and Thai Baht Offshore data from its Matching platform. The platform is Refinitiv’s anonymous central limit order book.
Both currencies have become ‘trade’ currencies using the WM/Reuters Trade Methodology. The change was launched on October 1, 2018, and is available today.
Before the implementation of the algorithm, which includes data from Matching, the THB and TOF benchmarks were calculated with a different methodology. The rates were based on indicative interbank quotes provided by a multitude of financial institutions.
Commenting on the move, the Global Head of Benchmarks at Refinitiv, Stephan Flagel, said, “The WM/Reuters FX Benchmark is valued by clients worldwide and we are proud to evolve the THB/TOF benchmarks to reflect accurately the new reality of the market, recognizing its enhanced liquidity and transparency.”
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Thai Baht Liquidity and Volatility
After rallying through until April this year, the Thai baht has been sold off in light of global emerging markets tensions. The currency is not the most speculative instrument as FX flows, and liquidity remain tight.
Refinitiv included the data from Matching after a thorough review of the market. The company believes that the move achieves the necessary requirements regarding sufficiency, quality and data hierarchy to evolve these benchmarks to become trade based.
Refinitiv’s WM/Reuters service is the leading marketplace for spot rates. The data covers over 150 currencies.
“Our WMR leadership and colleagues at Refinitiv have unparalleled market expertise and work closely with diverse market participants globally to ensure that our benchmarks are compliant with global regulations. The data is calculated using multiple broad and liquid sources, and is subject to stringent quality controls.”
The Thai baht addition compliments Refinitiv’s financial benchmarks portfolio. The company is administering over 30 key rates and serves as a calculation agent for over 40 critical national and regional interest rates and FX benchmarks. The countries include Singapore, Hong Kong, and Russia.