A new currency trading platform is about to hit the markets to take on the likes of CME Group’s EBS and Refinitiv’s Matching – with Cboe Global Markets, an exchange group, to launch its own new service, Cboe FX Central.
According to an article from the Financial Times, Cboe will be launching the new foreign exchange (forex) platform on Monday, building on its existing small currency trading venue.
The $6.6tn-a-day FX market is saturated, with there being at least 50 other trading platforms currently vying for market share. However, they are all dominated by EBS and Matching, at least in cash trading, with the combined market share for these two platforms being about $2 trillion.
However, according to the news outlet, the new platform from Cboe will provide clients who are trying to buy or sell at the nearest prices to the prevailing exchange rate with information about market moves first. This differs from EBS and Matching, which send data to all traders at the same time.
“We believe there is a unique opportunity to improve upon the two [main platforms] that currently exist in the FX market,” said Bryan Harkins, Cboe’s head of markets, told the Financial Times.
Although many alternative trading platforms have been launched, few have been able to make the same dent as EBS and Matching. However, Jonathan Weinberg, head of FX at Cboe Global Markets, told the news outlet he is confident regardless.
“We have ambitious plans and we think this is a good time to position ourselves as an alternative offering,” he told the Financial Times.
Cboe to launch platform as volatility lessens
Cboe will be launching its platform at a time of heightened volatility in the FX markets, driven by the coronavirus pandemic. Although trading activity has significantly increased so far in 2020, the years preceding were plagued with stagnant volatility.
This volatility has brought a new wave of traders into the FX space, but, as the threat of COVID-19 lessens and countries ease lockdown measures, volatility has begun to ease off, which has already shown a clear impact on trading volumes, with a number of exchanges and trading platforms reporting lower (from March), or even back-to-normal, levels of trading volumes.