Cboe FX reports higher monthly volume, but ADV disappoints

During November 2022, Cboe FX disclosed a total trading volume of $921 billion, up 3 percent on a month-over-month basis from $896 billion in October 2022‎. This figure was also higher by 19 percent year-over-year when weighed against $776 billion in November 2021.

In addition, the exchange’s institutional FX trading venue saw its average daily trading volume amounting to $41.8 billion in November 2022, down 2 percent month-over-month from $42.7 billion in October 2022.

On a year-over-year basis, the ADV numbers released by Cboe FX, formerly Hotspot, illustrated stronger performance, rising by 19 percent when weighed against $35.2 billion a year earlier.‎

We caught up with James Arrante, senior director of FX & UST product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed assts markets and learn more about the bourse operator’s recent initiatives.

While at the Annual FIA Futures and Options Expo, we asked James Arrante if the search for yield in fixed income has become easier and how it is affecting Cboe’s business in the FX and US treasuries.

Speaking first about their FX franchise, Arrante highlighted their expanding model, which has grown to include four different entities and seven platforms in total. Cboe’s FX business now covers disclosed trading solutions, outright deliverable forwards, and non-deliverable forwards (NDFs) through Cboe SEF. That, according to Arrante, covers all manners of how clients interact in the market and provides greater control of the trading process, enabling better execution and lower transaction costs for their global customer base.

Cboe FX turnover crossed the $1 trillion milestone earlier this year in response to Russia’s invasion of Ukraine. The recent pullback, however, raises serious questions about how deep a possible pullback in volumes will be, though it should not cause panic.

Liquidity management has been a key focus at Cboe FX over the past few years, coupled with adding extensive analytics capabilities. The company operates an electronic foreign exchange trading venue that permits certain institutions to enter into spot transactions with their preferred counterparties to meet their specific trading needs.

Dubbed ‘Cboe FX Point,’ the direct execution model provides institutional investors with a flexible range of options, including the ability to create custom, relationship-based connections.