Chicago Mercantile Exchange (CME), the worlds largest and most diverse financial exchange, and Reuters, the global information company renowned for its strong information network, are coming together in a 50-50 joint venture to create FXMarketSpace, a new platform for global forex trading. This venture has marked some firsts for both companies. For CME, it is the first move towards any spot market. And for Reuters, this would be the first time it owns a clearing business. FXMarketSpace, which is still subject to regulatory approval, combines CMEs central counterparty model and clearing function with the distribution and straight-through processing capabilities of Reuters to create the worlds first centrally-cleared Over-The-Counter Foreign Exchange (OTC FX) market place. Industry experts see the potential in it to transform the institutional and wholesale FX market and, thus, herald a new era for the global FX market.
Market
players are all enthusiastic about the new platform and have conveyed their support.
CME and Reuters have disclosed more than two dozen major forex players who have
expressed their interest to participate in the "Early Adopter Program"
and claim that it is "a major step forward". The participants cover
a cross-section of FX players including some of the Wall Street's biggest banks,
hedge funds, prime brokers, and proprietary trading funds. As members of the "Early
Adopter Program", the participants will allocate the required internal resources
to back their participation in the development and testing of the new platform.
"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", said FXMarketSpace CEO-designate Mark Robson, a former
member of Reuters. Tarun Anand, FXMarketSpace's Head of Sales for Asia, says,
"We are delighted by the response from a cross-section of market participants
including leading financial institutions from both the sell side and buy side
which have emphatically endorsed our proposition and are supporting us to make
the venue a success." With the industry experts having few doubts about its
success, the brainchild of CME and Reuters is billed as the next logical step
for the global FX's evolution.
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