CME Europe to Start New FX Liquidity Creation Programme in June

CME Europe Limited (CMEEL) today announced that it is replacing its current Long Term Revenue Share Programme (LTRSP) at the end of June 2016 with a new FX 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 Creation Programme (LCP), as per an advisory notice from the Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term.

The program is open to an unlimited number of members, but only the top 8 could potentially share in the $100,000 in funds that may be pooled as a reward to top participants that meet the 5% requirement of all trading volume, and who thus help improve trading conditions with the added volumes, as per the CME Europe update. CME Group, which wholly owns CME Europe, recently appointed Paul Houston as its Global head of FX based in London, as reported by Finance Magnates in April.

The LCP is not just a promotion for anyone, as eligibility requirements are involved, but it is open to all members and customers that can demonstrate their ability to enhance liquidity on an active basis, and not just meet the LCP requirements.

As part of the review process, the exchange may screen related transactions to help ensure they have a real economic rationale where satisfying the LCP requirements is merely incidental and not the main purpose of the volumes.

Aimed to enhance FX liquidity

Set to launch on June 1st, the LCP program will run for a period of six months initially, and member firms that wish to participate are required to apply by May 27th and thus have just three days left, as the existing LTRSP program will transition out by the end of June.

CME Europe lists a number of related incentives aimed to help attract and reward the addition of liquidity on some of the venues contracts, as such incentives have worked for major exchanges in the US, to help both narrow trading spreads and add efficiency to the market.

Although similar in concept, this type of promotion starkly contrasts with the types of promotions that retail FX firms typically offer - including deposit bonuses or trading competitions - which are purely driven to onboard more clients or for other marketing related efforts including branding.

A list of eligible products and associated points that are allotted for each lot traded can be seen in the excerpt below from the LCP description: