CME Group Sees 280% Jump in Block and EFRP FX Clearing

CME Group announced on Tuesday that the trading activities in blocks and exchange for related positions (EFRPs) across its offered foreign exchange (forex) products jumped by more than 280 percent year-to-date when compared to the previous year.

Blocks and EFRPs allow the clients of the exchange to clear trades with over-the-counter liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term for FX forwards, NDFs and FX options. CME has more than 20 such liquidity providers, offering blocks, large privately negotiated trade orders and EFRPs.

The demand for FX futures blocks jumped by 187 percent, whereas FX futures EFRPs and FX options blocks saw an uptick of 457 percent and 316 percent, respectively.

“The ability to lean on OTC liquidity with chosen relationships in order to obtain a price to access clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term for FX FWDs, NDFs and FX options is resonating with customers, especially in the real money community,” said CME Group’s Global Head of FX, Paul Houston.

“The execution-style of trading a block or EFRP on a relationship basis with their chosen liquidity provider is synonymous with how many of these participants trade in the OTC market today.”

FX Derivatives Are in Demand

Further, the American exchange highlighted that FX options volumes in contract terms last month jumped by 21.7 percent from the same month in the previous year, thus contributing significantly to Mach’s average daily trading volume of $110.9 billion.

“Block trading represents the best of both worlds, combining the liquidity and flexibility of OTC trading together with the central clearing that's a benefit of the listed space,” John Rothstein, the CEO of Optiver UK, said. “For institutional investors seeking to execute large transactions at a single price, it’s become a quick and convenient way of doing so, particularly when markets are volatile.”

Meanwhile, the CME Group reported a 22.5 percent year-over-year jump in 2021 operating income, while its revenue for the year increased by 4.4 percent.