Eurex to start trading new FX Futures contracts in Emerging Markets currencies

Eurex today revealed it will expand its FX Futures offering with three most heavily traded currencies outside the G10 – Brazilian Real (BRL), Mexican Pesos (MXN) and South African Rand (ZAR). The new Emerging Markets currencies will be available to trade on the exchange from 10 October 2022.

According to the official announcement, Euronext will list five new contracts covering Emerging Markets currency pairs including BRL/USD, MXN/USD, MXN/EUR, ZAR/USD, ZAR/EUR. Additionally, an accompanying liquidity scheme will ensure tight pricing and competitive liquidity.

The exchange further detailed that the new contracts will be cash settled in US dollars and euros upon expiry. This will ensure that clearing members can use their existing infrastructure and they will not be required to open new cash accounts in these Emerging Markets currencies.


Eurex explained:

Eurex FX Futures are similar to OTC FX Forwards but have significantly lower counterparty credit risk (CCR) because financial obligations are guaranteed by Eurex Clearing as the central counterparty (CCP). In addition, given the bilateral margin requirements in OTC trading under the Uncleared Margin Rules (UMR) or the revised capital requirements under SA-CCR, centrally cleared FX Futures can offer significant benefits to customers over OTC FX Forwards in terms of margin, funding, and operations.

Jens Quiram, Global Co-Head FIC Derivatives and Repo Sales at Eurex, said:

Jens Quiram, Eurex

Jens Quiram
Source: LinkedIn

We see more and more firms coming into the scope of the Uncleared Margin Rules who are looking for solutions to reduce their average aggregate notional amount and bilateral margin requirements. Listed FX Futures can address these challenges while reducing the overall risk of a portfolio due to Eurex Clearing’s multilateral netting capabilities.

With the latest addition, Eurex FX’s offering includes listed FX Futures on total of 25 currency pairs. The entire portfolio is accounted for when calculating margins and as a result there are more efficiencies in the collateral to be deposited. The exchange also offers clearing of OTC FX Non-Deliverable Forwards (NDFs) in Asian and Latin American currencies.

Earlier in August, Eurex published its trading volumes for July 2022, reporting steady growth in equity index derivatives and interest rate derivatives. In the beginning of the year, the exchange also expanded its MSCI offering with four new futures and two new option.

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