The past two weeks I’ve received several emails from Trader Dan asking me what I think of the initiative being take by the Chicago Mercantile Exchange (CME) and (Reuters) to create a global clearing house that promises to provide greater transparency and anonymity to the foreign currency exchange market. Here are the initial announcements that peaked his interest and mine. The $50 million project isn’t going to be introduced into the marketplace until early 2007.Reuters and CME to Launch Global FX Marketplace
Major Players Sign Up to FXMarketspace
When I first read these press releases, I couldn’t help but get a little excited. The implications of a global clearing house for spot trading are far reaching. Such a trading platform could provide spot traders direct, free market access though in my wildest dreams I can’t imagine that happening because to the best of my knowledge CME’s clientele is pretty much restricted to dealers and/or brokerage firms. That being said, I’m hoping that eventually the trading platform will be offered to Forex brokers interested in offering spot traders indirect access to the interbank currency market through a non-dealing desk platform.
During its infancy, the internet was the exclusive domain of the military, government, and academia. No one envisioned that its function would go much further than that let alone that practically every household would eventually tap into it. Let’s hope CME’s and Reuter’s vision is equally myopic and that demand will force them to revise their thinking.
Communication with an official at Reuters was less than encouraging. He responded to one of Dan’s emails saying that the platform would definitely not be made available to spot traders. But it doesn’t necessarily end there. In a recent article it appears that at least one of the parties involved in the test phase of the project disagrees.
Justin Foley, head of foreign exchange for The Gelber Group thinks the marketplace should be opened to all market participants which, I hope, means that eventually spot traders will be able to gain access to the technology as well even if its through an intermediary broker who charges commissions or transaction fees.. “We think that the time is right for the development of a central marketplace for the cash FX markets that is open to all market participants,” he said. You can read the entire article titled CME, Reuters Forex Venture Moves Forward.
Nothing is going to be resolved in the near term, but if you would like to keep track of developments you might want to add FXMarketSpace.com to the list of your favorites. I’m sure CME and Reuters will be providing progress reports.
Important Update
Just found the following reference on a forum to an email a trader received from a Chicago Mercantile Exchange representative that indicates that the offer of non-dealing desk trading for spot traders is in the mix.
"Thank you for contacting CME.
The FXMarketSpace will be available to all customers, institutional and retail.
Please let us know if you have any further questions.
Thank you,
CME Customer Service
1-800-331-3332
info@cme.com"
Unfortunately, I also found a more recent post from a trader who talked with a representative at CME and he reported that the current business model "doesn't" include retail. Go figure.
So what's one to do? Drop CME an email at the above address and let them know you're interested. Who knows. Maybe they'll change their minds again.
Home
Did you like this post? Spread the word.
Social Bookmarking
