Currency futures: Thank FX for survival

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Currency futures: Thank FX for survival

After a failed foray into treasuries, Eurex US is now pinning its business development plans on currency futures.

There were some questions about whether or not they would actually be launched. But the listing by Eurex US of currency futures might ultimately prove far more significant than the arrival of just another service provider in what is becoming an increasingly crowded FX market.

Doubts about the commitment of the Swiss-German Eurex derivatives exchange to its US subsidiary rumbled through almost to the point of the FX contracts' launch. But ultimately, the capability of Eurex US to provide near 24-hour trading earned a stay of execution as listing the FX contracts in Frankfurt was not a viable alternative due to the latter's restricted operating hours. So Eurex US got the green light and opened for FX trade on September 23.

Eurex US has made much of the size of the contacts it is offering, which it says align it more closely with the still dominant over-the-counter FX than those of the Chicago Mercantile Exchange (CME). Ultimately, contract size will probably prove less relevant.

The FX market is certainly big enough to have two major exchanges competing for business. What will prove more interesting is not whether or not Eurex US can capture business from the CME, but whether its arrival actually speeds the market's move to an exchange model.

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