CME targets online FX market for Asia growth

Electronic foreign exchange derivatives trading will play a key role in the Chicago Mercantile Exchange’s (CME’s) development in Asia over the next few years, according to a senior official at the exchange.

"Foreign exchange will certainly be one of the most important growth potentials in the [Asia-Pacific] region," Leo Melamed, CME chairman emeritus and senior policy adviser, told RiskNews’ sister publication FX Week, while on a visit to Beijing last week.

The sheer size of Asia in terms of population means there is scope for substantial growth in foreign exchange derivatives trading, said Melamed. The electronic trading services offered by CME will be key in capturing these markets, he said. CME’s Globex electronic trading platform has seen substantial volume increases over the past year. "Today, 60% of our volume in FX is electronically based, and we expect growth in Asia to be entirely electronic," said Melamed.

Within the Asia-Pacific region, CME is particularly targeting business in China, said Melamed, who last week discussed the development of a foreign exchange derivatives market in the country with Chinese officials. "They asked a lot of questions - there was clearly a lot of interest," he said. "But that’s not to say it’s going to happen next week. This is a step-by-step process that has the necessary potential to make it worthwhile."

Indeed, CME is committed to winning business in the long term in China, said Melamed. "Basically, the idea at this stage is to offer CME’s advice and expertise, and consequently in future years we hope to derive business from our efforts.”

As part of this effort, CME last week announced it would co-sponsor a new MBA programme for Chinese students with a focus on financial risk management. The exchange will also donate a collection of books on finance to Renmin University in Beijing.