London and Chicago - CME Group has announced it will launch spot foreign exchange (FX) basis spreads called 'CME FX Link' on CME Globex, CME Group's electronic trading platform.
This will create a central limit order book between the over-the-counter (OTC) spot FX and CME Group FX futures markets. It is expected to launch in Q1 2018 and is intended to provide OTC FX market participants with a more efficient way to access and use FX futures as part of their overall trading activity.
The CME FX Link enables trading of an OTC spot FX contract and a CME Group FX futures contract via a single spread trade on CME Group's CME Globex trading platform. This allows credit line management across both markets.
CME Group is partnering with Citi's FX Prime Brokerage unit to act as central prime broker for the spot FX transactions resulting from the spread. This will allow participants to leverage existing OTC FX interbank credit relationships and the scale of the established OTC FX prime brokerage network.
The FX basis spreads will be available in the new release testing environment in November and for first trade in Q1 2018 pending regulatory review and will initially be supported for six currency pairs: EUR/USD, JPY/USD, GBP/USD, CAD/USD, AUD/USD and MXN/USD. The spreads will be offered against each of the front three CME FX futures expiry months.