The average daily notional value (ADNV) of spot forex trading on the Chicago Mercantile Exchange (CME) Group's Electronic Broking Service (EBS) declined by -12% in October. Additionally, the ADVN slumped from $76.3 billion in September to $67 billion last month.
However, the ADNV jumped 15% year-over-year, CME Group disclosed in its October 2022 market statistics shared with Finance Magnates on Wednesday.
This is even as the CME Group recently reported solid third-quarter profits boosted by 26% in trading volumes.
"EBS Market has seen strong overall performance in October particularly in the second half of the month, after a quieter start during Golden Week in China, continuing to reflect the value and role of the primary market central limit order book in managing risk in more volatile and uncertain market conditions," Jeff Ward, the Global Head of EBS, explained.
Shrinking Spot Forex Market?
The drop in EBS’ spot forex ADNV is in line with the October slump in ADV volumes among top institutional spot forex venues, as observed by Finance Magnates. For instance, Cboe FX’s ADV dropped almost -7% MoM to $42.6 billion in October 2022. Further, its total monthly volume declined -11.1% MoM to about $896 billion.
Moreover, Deutsche Börse’s 360T reported an over -13% ADV decline in October. The top European spot FX trading venue’s ADV came in at $23.7 billion, with the total monthly volume reaching $499.3 billion.
Similarly, FXSpotStream LLC posted a -5.8% monthly ADV decline last month. The provider of multibank FX aggregation services for spot FX trading said its total monthly trading volume reached over $1.45 trillion in October, with over $69.1 billion in ADV.
Meanwhile, Finance Magnates observed that the institutional spot forex trading venues' ADVs came in stronger when compared year-over-year despite the monthly ADV drops.
'Strong' FX Futures and Options
In October, the ADV of forex futures and options traded on CME Global increased by 42% and 20% year-over-year, respectively. This is a continuation of "the strong performance" recorded in September when the FX futures and options volumes hit an -all-time high.
“Volumes continue to be supported by heightened FX volatility levels and increased customer adoption as exhibited by the growth in open interest and buy-side Large Open Interest Holders (LOIH),” Paul Houston, the Global Head of FX at CME Group, explained.
Rising Volumes on CME FX Link
Volumes on FX Link, a venue that enables a seamless connection between FX futures contracts and over-the-counter FX marketplaces, shot up by 150% compared to October 2021. On top of that, the ADV of the CME FX Link jumped 104% year-to-date when compared to the same period last year, CME Group noted.
“Volumes in MXN/USD on FX Link also set a monthly record in October, with a new single-day record of 16,988 contracts on 25 October,” Houston said. While earlier in September FX Link posted an all-time monthly volume record of 47,000 contracts.
‘Highest-ever October ADV’
Across all asset classes, CME Group’s ADV increased by 11% to 22.7 million contracts last month, "the highest-ever October ADV" recorded by the company. Furthermore, on a year-over-year basis, the Group’s foreign exchange ADV shot up by 42% to 1 million contracts.
While the equity index ADV increased by 59% to 8.5 million contracts, options ADV jumped 20% to 4.5 million contracts. Also, among other asset classes, CME Group’s interest rate ADV reached 9.8 million in October while the cryptocurrency ADV improved by 6%.
