FX Traders, the Future Belongs to You
The FX futures market has often intrigued the traditional OTC trader, viewed as a parallel marketplace with independent market interest and risk, fascinating enough for most to keep an eye on, but leaving many not entirely sure of how to participate in it. The last few years have, however, seen a wave of change coming through. Growing adoption from buy-side and sell-side firms saw the total number of institutions active in FX futures rise to over 1,100 firms in 2024, helping to further position the FX futures marketplace at CME Group to be foundational for market price discovery and risk transfer.
The significance of FX futures liquidity stands tall, providing a key marketplace that is fundamentally unique by virtue of the size and diversity of its ecosystem. This relevance as a complement to OTC trading can be seen even over large market events, with futures highly complementing the capabilities of the EBS Market platform to provide traders with trusted, deep liquidity when needed most.
With a daily average volume (ADV) of $88 billion, and an all-time highest single day volume of $314 billion reached in 2024, our FX futures volumes exceed many OTC FX venues today. Among the 45+ currency pairs available for trading, the EUR leads the volume rankings, followed by JPY and GBP. Last year saw all-time currency pair volume records in AUD, CAD, CHF, NZD and emerging market pairs like BRL and CNH, making the futures ecosystem more comprehensive than ever.
On March 5, 2025, open interest (OI) in our FX futures and options hit a record 3.73 million contracts, representing ~$347.5 billion in notional value.
What's driven the growth of FX futures?
Capital and margin efficiencies: FX futures are cleared products, typically trading to monthly and quarterly settlement dates, with most of the contracts requiring physical delivery in line with the OTC market and leveraging the main cycle of CLS. This means that CME Clearing backs all transactions, mitigating counterparty credit risk, without requiring market participants to use bilateral credit lines. Further, transparent and centralized margining of positions allows for efficiencies, with margin offsets provided between currencies, tenors and other cleared instruments like U.S. Treasury and SOFR futures traded at the Exchange.
Need for standardization and transparency: The proliferation of FX venues and distribution of electronic pricing has led to an increased need for establishing a market standard that is transparent and reliable. Our FX futures central limit orderbook (CLOB) facilitates anonymous order to order matching, with no concept of last look or order rejects, making the liquidity interaction simpler and transparent. Trading in standardized contracts has allowed for liquidity to concentrate and build up in fixed tenors (often IMM dated), ultimately leading to increased efficiency for market participants.
Breaking barriers to entry, and building bridges: FX futures enable segregation of credit from liquidity interaction, allows for equal, all-to-all order-based trading on its CLOB, and provides market data and information that is accessible to everyone. The large network of FCMs supporting access and our global footprint of client coverage has led to new entrants to the FX futures marketplace incrementally over the last few years. The ecosystem has grown by leaps and bounds to include global and regional banks, hedge funds, asset managers, corporate and retail accounts, to a total of ~1,100 global entities having traded our FX futures and options in 2024.
Our FX futures contracts are designed to be fungible to OTC, most being physically deliverable and others cash settled to market standard benchmarks. The development of unique tools like our FX Link (tradeable spot to futures basis) and workflow solutions facilitating blocks and EFRPs have further bridged the liquidity between futures and OTC markets, enabling traders to manage risk interchangeably and seamlessly.
Spot traders, don't go changing
We are now launching FX Spot+ on April 13, 2025, a new all-to-all spot FX marketplace that translates futures liquidity into spot terms and vice versa, expanding liquidity access to OTC traders and bringing the two markets together like never before.
The spot trader can continue to trade the Betty, the Loonie or the Bill and Ben, book and settle transactions in spot FX (with a central FX spot counterpart), while seamlessly interacting with the liquidity implied from and to our FX futures. This is made possible through using the live tradeable basis risk from the FX Link orderbook, with implication happening both ways in the background.
Ultimately, the key feature that FX Spot+ presents is a simple yet unparalleled, all-to-all spot market that allows for global FX risk to match with each other in a centralized, transparent liquidity pool through a credit-agnostic access. By building a unique, global network of market participants, connecting the vast trading communities of EBS spot platforms and FX futures marketplace built over the years, FX Spot+ is set to unlock the real value of bringing the FX market together.
For any comments, feedback or further information, please contact your CME Sales representative or FXTeam@cmegroup.com.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
