The Chicago Mercantile Exchange (CME) and Thomson Reuters announced that they are closing down FXMarketSpace, their centrally cleared Spot Forex exchange. The two year old venture will cease trading on October 17th. The long trouble platform has been unable to make significant inroads in the spot FX market and has not generated the volumes initially projected by the CME.
The venture has been an embarrassment for the CME which was desperate to succeed in the Spot Forex market. The CME has been unable to make significant headway in the FX space for years. Its currency futures products have lost out to spot FX in the retail and smaller institutional space. Futures firms have shown themselves incapable of selling exchange traded FX to their clients while Retail Spot Forex Dealers have dominated the space through unparalleled growth. The CME had taken a heavy-handed approach toward suppressing the retail FX industry by using its considerable political clout to push through anticompetitive legislation aimed at significantly reducing the Retail FX presence. The CME was hopeful that the centrally cleared FXMarketSpace would be able to capture market share from OTC dealers and banks and establish the CME’s foot hold in Spot FX.
Unfortunately FXMarketSpace proved less than enticing to buy-side firms comfortable with the prime broker model. In fact many professionals found the services to be superfluous in an environment serviced by CLS and easily managed using Traiana’s Harmony network and other settlement, netting and post trade solutions.
Tags: CME