Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
floating-rate payments on the 3-month US Dollar<br />
London Interbank Offered Rate.<br />
Ben Craig, president of NFX, says that market<br />
participants have expressed interest in trading<br />
currency futures of countries like Brazil, Russia, India<br />
and China and that NFX is looking into these<br />
opportunities.<br />
Nasdaq OMX Co-Location Services offers customers<br />
the opportunity to place their own trading systems<br />
within Nasdaq’s data centers, enabling access to all five<br />
of Nasdaq’s US markets, including NFX and PHLX.<br />
We are increasing our supply on an incremental basis<br />
to match demand and to ensure that all firms continue<br />
to have equal access to the service.”<br />
Craig believes that both investors and traders view the<br />
potential regulatory changes in Congress and a move<br />
from OTC to a regulated exchange as gaining<br />
momentum in the near term. “For FX traders who<br />
chose exchange-traded currency futures, the increased<br />
value proposition is the removal of counterparty risk,<br />
due to CFTC [Commodity Futures Trading<br />
Commission] customer segregated funds treatment.”<br />
DGCX<br />
The Dubai Gold & Commodities Exchange (DGCX)<br />
is the most recent to offer exchange-traded FX<br />
products and currently the only exchange in the<br />
region to offer a range of currency futures contracts.<br />
The exchange offers four currency pairs against the<br />
US dollar: euro, sterling, Indian rupee and Japanese<br />
yen.<br />
DGCX currency futures have shown strong volume<br />
growth and interest from market participants, year to<br />
date. Currency futures have seen volume growth of 88<br />
per cent this year <strong>com</strong>pared with 2008. YTD volume,<br />
as of the end of October 2009, is 440,000 contracts,<br />
valued at US $29.4 billion.<br />
In June 2007, DGCX launched the world’s first<br />
Indian rupee/dollar futures contract, aimed at<br />
enabling individuals and <strong>com</strong>panies to hedge their<br />
Indian rupee risk on a transparent trading platform.<br />
At that time, the only market available to hedge rupee<br />
risk was the non-deliverable forward (NDF) interbank<br />
market, which is unregulated, not transparent<br />
and not accessible to all participants.<br />
Continuing innovation in exchange-based currency trading >>><br />
Ben Craig<br />
“For FX traders who chose exchange-traded<br />
currency futures, the increased value proposition is the<br />
removal of counterparty risk...”<br />
The volatility of the Indian rupee also demonstrated<br />
the need for an efficient risk management (hedging)<br />
tool for the currency. DGCX rupee futures recorded a<br />
month-on-month growth of 52 per cent in October<br />
2009 and 533 per cent growth in year to date<br />
volumes. DGCX is only exchange outside of India to<br />
offer a rupee/dollar futures contract, making it<br />
available for trading to international participants.<br />
Eric Hasham, CEO of DGCX says: “DGCX was the<br />
world’s first exchange to offer Indian rupee/dollar<br />
futures contracts. Our Indian rupee contract was<br />
enhanced a year ago making it cash settled, enabling a<br />
wider number of participants to take advantage of its<br />
benefits.<br />
Settlement is based on the US dollar reference rate<br />
published by the Reserve Bank of India on the last<br />
day of trading. This facilitates the settlement process<br />
for both local and international market participants,<br />
as well as providing transparency and alignment with<br />
the domestic rate.”<br />
“Future initiatives and our product development<br />
strategy are based on customer-driven demand and<br />
january 2010 e-FOREX | 49
Change language