CBOE Global Markets (NASDAQ: CBOE) swap execution facility (SEF) will now be supporting non-deliverable FX forwards (NFDs). The newly expanded FX offering represents the group’s broadest foray into the NFD market to date.
One of the main impetuses for the launch has been regulatory obligations surrounding the trading of NDFs. Dodd-Frank legislation stipulates that select market participants trade swaps on SEFs. To help reconcile these requirements, the group has facilitated this trading using proprietary CBOE technology, namely across emerging markets currencies.
The current available contracts on CBOE SEF include USD/KRW, USD/BRL, USDINR, USD/TWD, and USD/CNY.
Bryan Harkins, Head of U.S. Markets & Global FX at CBOE, commented on the launch: “Our next generation SEF was built on a flexible trading and settlement model that opens unique liquidity opportunities for our clients in the NDF market. We are very excited that we were able to further expand our FX offerings by delivering this new NDF market.”
Spotlighting CBOE SEF
CBOE SEF supports a state-of-the-art market model that entails a variety of different components to help better cater to market participants’ needs. This includes a fully anonymous central limit order book with firm all-to-all trading available to all market participants.
Furthermore, liquidity appears to be an area of emphasis on CBOE SEF, as the group has made dedicated attempts to enable firm and non-firm streaming quotes for tailored liquidity needs. Curated liquidity pools are provided to market participants’ execution criteria.
Finally, CBOE SEF includes a diverse network of market participants resting passive liquidity in tandem with a wide distribution network for market makers.
The announcement constitutes the second marquee development at CBOE this week, with the group introducing Bitcoin futures on Monday December 10. CBOE will be providing an initial incentive to Bitcoin market aficionados with free trading until the end of December as it tries to gain a leg up on competition in the market, particularly from rival exchanges.