A group of the world's largest banks along with several hedge funds and trading firms have signed up to participate in FXMarketSpace, a centrally-cleared, global foreign exchange marketplace to be established by UK news and information group Reuters and the Chicago Mercantile Exchange (CME).
Reuters and CME said in May that they were establishing FXMarketSpace to capitalise on the growing demand for broader access to the FX market, the emergence of FX as an asset class, the growth of non-bank financial institutions in global FX markets and the growth of electronic and algorithmic trading.
The service is expected to launch in early 2007 and will be the world's first centrally cleared electronic trading platform for the cash FX market.
Banks and prime brokers that have agreed to participate in an early adopter programme include AIG, ABN Amro, Barclays Capital, Citigroup, Credit Suisse, Fimat, HSBC, JPMorgan, Merrill Lynch, Prudential Financial/Bache Financial, RBS, Société Générale and UBS.
Other financial institutions, including investment management, hedge funds and proprietary trading firms such as Allston Trading, Citadel, Gelber Group, Penson Worldwide and RGM Advisors have also signed up to use the system.
Reuters says these financial institutions will be involved in the platform’s development and will commit resources to and participate in the beta test and launch phases.
Mark Robson, CEO-designate of FXMarketSpace, says: "This early support confirms the market's readiness for a more open, transparent and efficient global FX trading platform and FXMarketSpace's unique ability to deliver on that order."
The vendor says FXMarketSpace will provide credit-efficient access to the over-the-counter (OTC) FX market, order book transparency and total anonymity to market participants. The platform will also deliver greater operational efficiency through its market-leading straight-through processing (STP) technology.
While FXMarketSpace is expected to offer a full breadth of FX capabilities including spot, forwards and options, phase one will facilitate spot trading transactions. The initial product offering will be six major currencies - the euro, Japanese Yen, British pound, Australian dollar, Swiss franc and Canadian dollar against the US Dollar, as well as four cross-currency pairs.
Reuters and CME say the service has received all necessary antitrust clearances, although formation of the joint venture remains subject to Reuters shareholder approval.