FXMarketSpace

FXMarketSpace, commonly abbreviated as FXMS, was a centrally cleared electronic platform for the global over-the-counter cash foreign-exchange market. It was established as a 50/50 joint venture between Reuters and the Chicago Mercantile Exchange, now known as CME Group, and was designed to address several structural concerns in institutional foreign-exchange trading. Its proposed model combined electronic execution with centralized clearing, anonymous trading, and mechanisms intended to reduce both counterparty exposure and settlement risk. Reuters and the Chicago Mercantile Exchange announced the joint venture on 4 May 2006 after obtaining approval from the United Kingdom's Financial Services Authority. The platform was intended to serve banks and other professional market participants seeking faster execution, improved operational efficiency, anonymity, and post-trade risk management in the largely decentralized over-the-counter foreign-exchange market. Unlike a conventional bilateral dealing arrangement, FXMarketSpace sought to place a central infrastructure layer between trading counterparties. The service was declared fully operational and open for trading on 26 March 2007. Its business proposition depended heavily on attracting sufficient participation from major foreign-exchange dealers and institutional users. Network liquidity was therefore critical: without a broad and active participant base, the platform could not easily compete with established bilateral dealer relationships and other electronic venues. In March 2008, FXMarketSpace introduced FXSettle, a settlement service intended to route trades directly to a bank or settlement agent. The service was presented as a way to reduce settlement and replacement risk while lowering associated costs. In September 2008, the company said that FXSettle had successfully settled $35 billion. The announcement came during a period of severe financial-market volatility, when counterparty and settlement risks were receiving heightened attention. Despite the platform's technology and risk-management features, it did not attract enough liquidity to become commercially sustainable. Reports in September 2008 indicated that CME had decided to stop financially supporting the venture, although FXMarketSpace did not comment at the time. On 10 October 2008, CME and Thomson Reuters announced that they would close the platform. FXMarketSpace is therefore a defunct financial-market infrastructure brand rather than an active trading venue.

FXMarketSpace was created to bring exchange-like infrastructure to the global over-the-counter cash foreign-exchange market. The venture was formed equally by Reuters and the Chicago Mercantile Exchange, combining Reuters' market-data and financial-information capabilities with CME's experience in regulated derivatives-market infrastructure and clearing. Its proposed architecture was intended to provide speed, efficiency, anonymity and centralized clearing in a market that traditionally relied on bilateral relationships between banks and other dealers. The joint venture was announced on 4 May 2006, when the companies also disclosed that the project had received approval from the United Kingdom's Financial Services Authority. The same date was associated with the resignation of executive director Bryan Hunter. FXMarketSpace subsequently developed its electronic trading and clearing infrastructure for institutional foreign-exchange participants. On 26 March 2007, the company stated that FXMarketSpace was fully operational and open for trading. The launch represented an effort to establish a new multilateral venue in a market dominated by dealer-to-client and interdealer relationships. The platform's commercial success depended on achieving sufficient liquidity, because active participation by banks and other professional users was necessary to generate competitive pricing and execution. The company expanded its post-trade proposition in 2008. On 31 March, FXMarketSpace announced FXSettle, a settlement solution that routed trades directly to a bank or settlement agent. The service was designed to address settlement and replacement risks and to reduce processing costs. On 18 September, FXMarketSpace said that FXSettle had successfully settled $35 billion. The announcement emphasized the relevance of settlement-risk controls during the financial-market turmoil of 2008, when failures or difficulties involving counterparties had become a major concern. The platform nevertheless struggled to build the liquidity required for long-term viability. A report in September 2008 stated that CME had decided not to continue financially supporting FXMarketSpace, though the company declined to comment. On 10 October 2008, CME and Thomson Reuters formally announced that they had decided to close the service. The closure ended the venture after roughly two years of live operation. FXMarketSpace's history illustrates the difficulty of introducing a new centralized venue into a deeply established over-the-counter market: technological and risk-management advantages were not sufficient without broad and durable participant adoption.

• 2008

  FXSettle is introduced

  [1]Fxmarketspaceen.wikipedia.org

  FXMarketSpace announced FXSettle, a settlement service intended to route transactions directly to banks or settlement agents and reduce settlement-related risks.

• 2008

  FXSettle settlement volume announcement

  [1]Fxmarketspaceen.wikipedia.org

  The company announced that FXSettle had successfully settled $35 billion.

• 2008

  Closure announced

  [1]Fxmarketspaceen.wikipedia.org

  CME and Thomson Reuters announced that FXMarketSpace would close after failing to attract enough liquidity.

• 2007

  Platform opens for trading

  [1]Fxmarketspaceen.wikipedia.org

  FXMarketSpace declared its trading platform fully operational and open to market participants on 26 March.

• 2006

  Reuters and CME announce FXMarketSpace

  [1]Fxmarketspaceen.wikipedia.org

  Reuters and the Chicago Mercantile Exchange announced a 50/50 joint venture to build a centrally cleared global foreign-exchange platform. The venture received Financial Services Authority approval.

A neutral, anonymous and centrally cleared institutional foreign-exchange venue intended to improve trading efficiency and reduce counterparty, replacement and settlement risks.

• Centrally cleared foreign-exchange trading platform · 2007

  FXMarketSpace

  FXMarketSpace was an electronic venue for institutional participants in the global over-the-counter cash foreign-exchange market. Its design sought to combine anonymous execution with centralized clearing, enabling participants to trade without directly exposing their identities while reducing bilateral counterparty exposure. The platform emphasized speed, efficiency and risk controls, but its business model required substantial liquidity from banks and other professional participants. It was launched for trading in 2007 and closed in 2008.

• Foreign-exchange settlement service · 2008

  FXSettle

  FXSettle was a settlement solution announced by FXMarketSpace in March 2008. It was designed to route completed trades directly to the relevant bank or settlement agent, with the stated aims of reducing settlement and replacement risk and lowering processing costs. FXMarketSpace later reported that the service had successfully settled $35 billion. FXSettle was discontinued when the wider FXMarketSpace platform closed.

• 2008

  Launch of FXSettleProduct launch

  Background

  FXMarketSpace operated in a market where settlement and counterparty risk were important concerns, particularly during the financial volatility of 2008.

  Action taken

  The company introduced FXSettle to route trades directly to a bank or settlement agent and to reduce settlement and replacement risk.

  Aftermath

  FXMarketSpace later reported $35 billion in successfully settled transactions, but the overall platform was closed later in 2008 because it had not attracted sufficient liquidity.

  Settlement volume. $35 billion (By September 2008)

  Source

• 2008

  Decision to close FXMarketSpaceStrategy

  Background

  The platform had not developed enough liquidity to support continued operation, and reports indicated that CME would no longer financially support it.

  Action taken

  CME and Thomson Reuters announced that FXMarketSpace would be closed.

  Aftermath

  The FXMarketSpace venture ceased operations after its owners concluded that the platform was not commercially sustainable.

  Source

1. 1Fxmarketspaceen.wikipedia.org