Launch of CME Group's new FX trading platform
Spot trading has not felt great over the past two years. Activity fell to historic lows. Nevertheless, attentive traders could notice that the situation has started to change. In November 2023, average daily activity volumes rose again by an average of 10%. This trend could mean that spot trading will continue to gain momentum in the future.
Spot trading itself means trading here and now - i.e. on-spot. It can be traded in commodities, bonds, all sorts of assets, but most commonly in various cryptocurrencies. Crypto-assets have incredible volatility and this allows traders to make money on price fluctuations. This is what attracts traders to spot trading.
This way of trading is ideal for beginner traders. Actually, it is the most transparent way to the cryptocurrency market. Among other things, it is safe and quite simple. Moreover, the latest news in the spot trading industry says that it may become even more transparent and provide traders with new opportunities by the end of 2024.
CME Group - the largest platform for currency trading - has decided to launch a new platform for on-spot trading. Spot+ is being created to seamlessly integrate and complement CME's EBS platform. At the moment it is the main platform for trading euro, franc and yen. The new platform will fill a gap in CME's business. Traders will have exclusive access to the group's currency futures.
Trading participants will be directly connected to the exchange's futures liquidity pool. The Spot+ system utilizes CME's FX Link technology. It is precisely what makes it possible to combine currency trading with CME FX futures trading. Traders will thus have increased access to futures liquidity, both OTC and OTC FX. All of this will be able to increase transaction transparency and trading opportunities for clients.
Spot+ will be launched for testing in the second half of 2024. For traders, this means additional liquidity in currency trading. Using CME Group's futures liquidity can be extremely profitable. CME in turn plans to increase the volume of activity in this way, which has been depleted by constant competition. Spot trading activity is consistently growing for the first time in two years and CME Group's actions may positively influence the situation.
In particular, activity on CME's EBS trading floor has increased. Although the volume decreased by 17% compared to last year, CME futures remain consistently popular among traders. The average daily volume of contracts is growing and the indicators promise to bring spot trading back to the heights.
The existence of such venues is very important for FX trading. In recent years, many have been skeptical of on-spot trading volumes. Competition has certainly increased and many platforms continue to vie for this market. These include platforms such as FX Central and 360T. The big banks, for their part, make little use of their own internal liquidity.
The situation in the spot trading industry may soon change. The launch of Spot+ will allow CME Group to finally consolidate its FX products and fill the gaps in its huge pool of 40 currency pairs. For the group, this decision is hugely significant. It will be the first major merger of products since 2018, when the group bought the EBS platform.
All of this leads us to conclude that the spot trading landscape could change dramatically by the end of next year. Traders will have access to new capabilities, trading will become more transparent, and CME will be able to consolidate its FX products into one division. Whether clients' expectations will be met or whether spot trading will decline again will be seen in the second half of 2024.