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FXMarketSpace launches first centrally-cleared foreign exchange platform

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FXMarketSpace, the world’s first centrally-cleared, global foreign exchange platform for the over-the-counter market, is fully operational and open for trading, less than 11 months after R

FXMarketSpace, the world’s first centrally-cleared, global foreign exchange platform for the over-the-counter market, is fully operational and open for trading, less than 11 months after Reuters and the Chicago Mercantile Exchange announced its establishment last May.

A total of 12 clearing prime brokers are already live on FXMarketSpace, ensuring that their customers can start to trade immediately, and a further eight are committed to joining. Customers have successfully tested their ability to connect to and use FXMarketSpace, and have started to trade actively in a live environment. Currently 76 customers are either live or in the process of joining, significantly ahead of initial expectations.

‘The launch of our platform means that the doors are now open for a broader and more diverse range of institutions to participate in the global FX market, which will benefit from better execution and the increased efficiencies that we can offer,’ says FXMarketSpace chief executive Mark Robson.

‘Our existing customers are already convinced of our ability to meet their needs and deliver high-performance results. FXMarketSpace will fuel further rapid growth in our industry and create new opportunities for our customers.”

The participating banks and prime brokers include ABN Amro, Bank of America, Barclays Capital Prime Services, Bear Stearns Forex, Calyon Financial, Citigroup, Credit Suisse, Deutsche Bank FX Prime Brokerage, JPMorgan, Penson GHCO, Prudential Financial/Bache Financial, Rand Financial Services, RBS, Société Générale Corporate & Investment Banking and UBS. Other financial institutions include D Square, FX Concepts, GMO, Infinium and Saxon Financial.

FXMarketSpace believes that it has the potential to transform the institutional FX market through its centrally cleared credit model. Its features include broader access enabled by CME Globex API connection and more than 100,000 Reuters FX desktops, supplemented by access through four independent software vendors, Flextrade, GL Trade, Patsystems and Trading Technologies.

The system offers trading anonymity through a central counterparty model that enables all customers to buy and sell without their identity disclosed to other market participants. All prices are available to all participants and five levels of market depth are displayed, offering increased price transparency that will enable greater participation and increased liquidity.

The platform, which promises robust, scalable technology that supports minimum latency and maximum order throughput, enables spot trading in six major currencies, the euro, yen, sterling, Australian dollar, Swiss franc and Canadian dollar against the US dollar, as well as four cross-currency pairs.

‘FXMarketSpace represents the next step in the evolution of the FX markets, directly in response to customer demand,’ says Reuters chief executive Tom Glocer. ‘It brings innovations including central counterparty clearing, more efficient credit handling, anonymity and raw speed.’

CME chief executive Craig Donohue says: ‘FXMarketSpace is a key component in CME’s strategy of leveraging our trade matching and clearing strengths in the OTC market. As I said when we launched this venture last year, we believe that FXMarketSpace has the potential to revolutionise the FX market.’

Clients have warmly received the new platform. Says Brian Duff, head of prime brokerage at RBS Greenwich Capital: ‘The development of a centrally cleared FX trading platform for the OTC market allows us to both extend our product offering to existing customers and attract new entrants to our prime brokerage business.’

Kevin Kennedy, chief technology officer at Prudential Financial/Bache Financial, says FXMarketSpace allows his firm to satisfy increasing customer demand for an FX trading venue that maximises clearing and settlement efficiency, while Kelly Adams, chief technology officer at FX Concepts, says: ‘The benefits of an exchange are finally available to the cash FX market.’

A joint venture between Reuters and CME, FXMarketSpace is billed as the first FX platform to involve the entire spectrum of market participants including global and regional banks, asset managers, corporations, hedge funds and other market makers. The platform utilises CME’s central counterparty model and clearing function, with access via Reuters’ premium desktop services and CME’s API.

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