The deal significantly expands CME's distribution and enhances Reuters customers' ability to seamlessly trade FX spot, forwards and futures. Reuters FX trading customers, using Dealing 3000 in 3,500 institutions located in 123 countries, will be able to access CME's electronically traded eFX futures markets. For the first time CME's eFX futures market will be directly accessible by a significant cross section of the interbank FX spot trading community.
The two companies will be showcasing their joint offering at the European ACI Congress, opening this week in London from 27-29 May.
"The distribution of CME's eFX markets through Reuters unparalleled trading network combines the resources of two of the world's most dynamic FX markets into one seamless trading environment creating additional growth potential for both," said CME Chairman Terry Duffy. "This is yet another example of how CME is working to forge creative business alliances that deliver value to our customers and shareholders."
Under the agreement, CME's eFX markets, traded on its GLOBEX(R) platform, will be easily accessed via Reuters Dealing 3000 desktop with straight through processing of trades in Reuters Ticket Output Feed (TOF) standard. Quotes on CME's eFX products will appear in spot (or cash) equivalent terms to further ease usage for cash market participants by facilitating price comparisons between the two markets, potentially bringing greater pricing efficiencies to both. Because of the financial guarantees provided by CME's Clearing House, banks will also be able to trade with non-bank participants in a credit-enhanced environment. In order to facilitate the order execution and risk management, Reuters and CME have selected FFastFill Plc and Future Dynamics Ltd independently to provide the related services.
"FX trading is experiencing strong growth and attracting new interest from both banks and the wider financial marketplace," said Mark Robson, Global Head of Treasury and Fixed Income, Reuters. "Reuters aims to capitalise on these trends and benefit its customers through this alliance with CME. Reuters Dealing 3000 users will gain simplified access to FX execution and straight through processing, whilst increased inter-bank trading onto CME will enhance price discovery and the liquidity available to the whole marketplace."
Chicago Mercantile Exchange, the largest U.S. futures exchange, provides the world's largest regulated marketplace for foreign exchange trading. Reuters, an international leader in financial information and analytics, which serves 427,000 financial professionals worldwide, provides the world's leading FX platform for spot and forwards trading.
"CME's FX markets are in the midst of one of their most robust growth periods ever. This growth is being driven largely by eFX volume which was up152 percent in the first quarter 2004 versus year ago levels. Meanwhile, total FX volume has averaged as much as $22 billion per day in notional value in recent months," said CME CEO Craig Donohue. "In conjunction with our recently announced eFX incentive pricing program, CME is clearly committed to the continued global expansion of its FX franchise."
The service will go live in the fourth quarter and will be initially available in London, with roll out to additional markets in Europe, Asia and North America following. Participants would only require minor technical adjustments to their existing Reuters workstations for connectivity.
CME offers 30 different foreign exchange products, including U.S. dollar-denominated and cross rate products. CME's FX contracts were the world's first financial futures products when they were introduced in 1972. CME and Reuters previously collaborated in the late 1980s and early 1990s to pioneer electronic futures trading through the original GLOBEX system.
