CME Europe is to introduce a new incentive programme for market-makers in FX futures in a bid to boost liquidity in the contracts, a move that comes as large exchange operators in the region increase their presence in the forex markets. The Chicago Mercantile Exchange’s European trading venue will select five trading firms to be a part of the year-long scheme, which is set to launch on October 1, 2015, according to a notice published on August 14. The chosen market-makers will be obliged to provide pricing for 100% of the trading day under normal market conditions. In a volatile market, they will be allowed to temporarily withdraw pricing, but CME Europe will have the right to investigate if a firm’s presence in the market dips below 90% during European hours. In return for the liquidity provision, CME Europe will pay a flat execution and clearing fee of one US cent for all FX products listed on the exchange. It is also giving firms the option of an advance stipend to cover the cost of setting up a market-making practice on the exchange, or a monthly stipend to help with ongoing costs, or both. These may include co-location charges, data feed costs, and human capital in terms of hiring staff to manage the scheme. However, market-makers will have to repay the advance stipend through credits earned by participation in qualifying trades. CME Europe is due to select its five participants by September 4, 2015 and will monitor compliance on a quarterly basis. Eligible candidates must have prime brokerage access, be an existing clearing member or have a relationship with one, be able to make markets through sufficiently sophisticated technology and have access to other markets for hedging and pricing. The exchange, which launched in April 2014, offers futures contracts in FX and commodities, including biofuels. It has a number of other incentive programmes in place, including discounts for clearing members, a long-term revenue share programme and a six-month liquidity provider programme. Contracts at CME Europe are cleared through CME Clearing Europe, which promoted COO Tina Hasenpusch to the role of CEO in June. The exchange itself appointed Cees Vermaas, formerly the CEO of Euronext Amsterdam, as its chief executive in January 2015, following the death of Robert Ray in March 2014. Ray led the initial efforts to establish CME Europe. The move comes as exchanges show increased interest in FX trading. Deutsche Börse, which owns derivatives venue Eurex, acquired FX spot and swaps-trading platform 360T for €725 million in July, while Bats Chi-X Europe bought HotSpot FX from broker KCG in January for $365 million. The CME Group was in line to buy interdealer broker GFI and its technology assets, including energy and FX trading platforms Fenics and Trayport, until a hostile takeover bid by broker BGC Partners for GFI succeeded in disrupting the deal in February.
FX Europe has opted for a new incentive scheme aimed at the futures market - makers . The exchange aims to boost confidence in the market , as large exchange operators increase their presence in the forex markets .