EBS BrokerTec, ICAP's market-leading electronic foreign exchange (FX) and fixed income business, and Singapore Exchange (SGX), Asia’s leading and trusted market infrastructure, today announced the signing of a definitive agreement to launch SGX listed FX block futures on EBS BrokerTec’s FX central limit order book (CLOB), EBS Market, a primary venue for e-traded currencies.
The strategic collaboration between EBS BrokerTec and SGX announced in January 2015 will bridge the FX over-the-counter (OTC) and futures markets. The agreement announced today will enable market participants to seamlessly access an enhanced liquidity pool for trading Asian Spot, NDF and Futures instruments via the EBS Market.
The listed FX block futures will be available on EBS Market in early Q2 2016 pending regulatory approval. Trades will be cleared through SGX’s next generation trade registration system, Titan OTC. The initial offering will include SGX block futures in INR, KRW, CNH, SGD and CNY.
The benefits are two-fold. EBS BrokerTec’s direct connectivity into Titan OTC will provide customers with automated straight-through-processing for trades matched electronically on EBS Market and SGX’s central clearing will provide increased capital efficiency.
This is the first initiative that EBS BrokerTec and SGX will bring to the market, as part of a long-term strategic partnership. Further opportunities will be announced in due course.
EBS BrokerTec and SGX have both seen exponential growth in Asian currency volumes for their respective businesses.
SGX trading volumes have increased across its suite of fifteen listed FX futures contracts, in particular the INR/USD and USD/CNH contracts. Average daily volumes of the INR/USD contract exceed USD700 million in notional value traded per day. The USD/CNH contract has surged more than fourfold since inception 12 months ago to exceed USD19 billion in total notional value traded, helping to establish it as the most liquid offshore RMB futures product traded across global futures exchanges.
The increasing move towards electronic trading of NDFs has led to a significant uptick in EBS Market NDF volumes. INR and KRW remain two of the most actively traded NDFs on EBS Market, marked by 30% annual growth for KRW and 14% for INR volumes respectively and record end-of-month volumes for both currencies in Q3 2015. Sustained growth was also seen in CNH, CNY (onshore RMB), and SGD.
Michael Spencer, Group CEO of ICAP Plc and Chairman of EBS BrokerTec, said, “I’m extremely pleased that we have signed a collaboration agreement with SGX to launch SGX listed FX block futures on EBS Market. Our partnership will allow us to develop new business opportunities and product offerings, and significantly strengthen liquidity in the FX OTC and futures markets. This is an exciting opportunity for ICAP, our customers and for the financial markets in Asia and we look forward to the launch next year.”
Loh Boon Chye, CEO of SGX, said, “This collaboration is a sign of our commitment to innovate and grow the Asian currency futures market. It will also provide a mutually beneficial market for both our customers given the strength of EBS’ network and SGX’s risk management and clearing tools. We look forward to further collaboration with ICAP and EBS BrokerTec to develop new products and services that complement and grow the FX OTC and futures markets in Asia.”