NEX Group Leverages EBS Tech to Reshape Chinese Interbank FX Market

Institutional FX in China is booming amid increasing levels of volatility are likely to boost it even further.

NEX Group is expanding its effort in the Chinese market. After earlier committing to a partnership with the People’s Bank of China’s CFETS (China Foreign Exchange Trading System), the firm is rolling out its platform.

Earlier today in Shanghai, the financial technology firm launched a new foreign exchange trading platform for Chinese institutional investors called CFETS FX2017. The PBOC’s CFETS system is an interbank trading platform that is providing infrastructure to local players.

The first day of trading saw a total of 480 institutions logging into the product, with 307 of them executing orders.

Commenting on the launch, the CFETS president said: “The launch of FX2017 is a major upgrade of our financial trading infrastructure. It effectively ensures the safe, stable and efficient operation of the inter-bank foreign exchange market, enforcing the pricing power of the domestic Chinese market and opening it up to the global foreign exchange market.”

First Phase of NEX Group’s CFETS FX2017 Deal

The Chinese government has committed to a partnership with NEXT in June 2016, securing for the company a lucrative business opportunity. Back in December, the CFETS rolled out the initial phase of the new trading platform with a central limit order book (CLOB) platform for transacting in spot onshore Chinese renminbi (CNY).

The product brought a new era for the Chinese market by delivering anonymous execution capability to the Chinese market. Market participants have access to a central liquidity pool around the public reference point which the PBOC is setting on a daily basis for the CNY.

Second Phase Rollout

On the 5th of February, CFETS went live with phase two of FX2017. The rollout represents a relationship-based platform for CNY trading. The offering includes spot, forwards and swaps. Clients of the liquidity pool can choose between various participants delivering market liquidity.

The platform includes bank and non-bank LPs with instant execution on the prices that are displayed on the market. The inter-bank FX market trading volumes totaled $62.8 billion in the first day. The company reports a robust rollout with the stability of the system backing up increased interest that resulted in a consistently high order flow.

Built on the NEX Markets’ EBS trading platform, the new solution for the institutional Chinese FX market is essential for the evolution of the convertibility of the Chinese currency. With the PBOC’s central reference point for the yuan being an anchor for the forex market in China, the country’s slow progress toward a more market-driven FX rate is likely to evolve sooner rather than later.

The CEO of NEX Group, Michael Spencer, said: “The launch is a significant milestone in the development of the domestic FX market, and we will continue to support our CFETS partners as they roll-out further phases and we explore further partnership opportunities in the future.”

“The Chinese FX market now has access to multiple execution options in a robust and low latency environment. The launch of this new central limit order book platform in mainland China will play a fundamental role in providing a public reference point for spot CNY pricing in the domestic FX market,” added the CEO of NEX Markets, Seth Johnson.

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