Securities Financing Derivatives News | Eurex expands its currency futures offering to emerging markets
Eurex has announced that it will begin trading new currency futures (FX) covering the Brazilian real (BRL), Mexican pesos (MXN) and South African rand (ZAR) on October 10, 2022.
A total of five new contracts will be listed covering the emerging market currency pairs BRL/USD, MXN/USD, MXN/EUR, ZAR/USD and ZAR/EUR.
The European derivatives exchange firm says an accompanying liquidity program will ensure tight pricing and competitive liquidity.
The new contracts will be settled in cash in US dollars or euros at maturity. Therefore, Clearing Members can use their existing infrastructure and will not be required to open new treasury accounts in these emerging market currencies.
According to Eurex, currency futures are similar to over-the-counter (OTC) currency futures, but have significantly lower counterparty credit risk, as the financial obligations are guaranteed by Eurex Clearing as a central counterparty. .
In addition, centrally cleared currency futures contracts may offer advantages to clients over OTC currency futures contracts in terms of margining, funding and operations.
Commenting on the announcement, Jens Quiram, Global Co-Head of Fixed Income Derivatives and Certificates and Repo Sales at Eurex, said: “We are seeing more and more companies falling within the scope of unmatched margining rules that seek solutions to reduce their aggregate average notional amount and bilateral margining requirements.
“Listed currency futures can address these challenges, while reducing overall portfolio risk through Eurex Clearing’s multilateral netting capabilities.”