Manage Mexican Election Uncertainty with MXN/USD Futures and Options

Commentary from our Chief Economist, Blu Putnam…

The Mexican Presidential election is on July 1, 2018.  The former Mayor of Mexico City, Andrés Manuel López Obrador, is the front runner.  He is focused on income inequality and government corruption.  All the candidates are uniformly anti-U.S.  The U.S. will probably announce its withdrawal from NAFTA before the Mexican election or shortly thereafter.  Canada has also made clear that it will not be bullied by the U.S over NAFTA. The Mexican peso is in the spotlight and is vulnerable.

Manage exposure with CME MXN/USD futures

  • Product code: 6M
  • Bloomberg code: PEA
  • Offers deep liquidity and a diverse pool of participants
  • Provides capital efficiencies with margin offsets up to 30% across eligible futures products
  • Access via CME Globex or your preferred liquidity provider with blocks – FX Futures and Options Block Market Maker directory

Growing Volume and Open Interest

  • CME MXN FX futures and options average daily volume of 70K contracts per day in 2018 (as of 6/22), +34% YoY
  • Average daily open interest of over 200K contracts

Growing Use Among Institutional Traders

  • The June 12, 2018 CFTC commitment of trader’s (COT) report showed 167 Large Open Interest Holders (LOIH) in MXN/USD futures – matching the all-time high
  • As of June 19, 2018 COT report:
    • Asset Managers hold 51.1% of Longs, and 37.3% of total OI
    • Short positions by Leveraged Funds are higher than long positions for the first time since May 1, 2018

MXN Futures Average Bid/Ask Spread

  • Trading available 24 hours a day and dedicated market makers providing liquidity across all time zones
  • The bid/ask during North American trading hours in May 2018 averaged: $0.000015 (equivalent of 0.00062 peso/$)

Renewed liquidity in MXN options ahead of election

  • July serial options (6MN8) expire Friday, July 6 for managing exposure to the Sunday, July 1 election
  • CME Globex codes:
    • Quarterly/Serial: 6M
    • Weekly: 1M-5M
  • Bloomberg codes:
    • Quarterly/Serial: PEA OMON
    • Weekly: 1MA to 5MA
  • Block trades (minimum of 50 contracts) can be executed with an associated futures hedge. (That futures hedge must meet the standard of being a reasonable delta hedge, which may be a lower benchmark than the minimum requirement for futures block trades.)

Contact Us

Craig LeVeille – Executive Director, FX Products

Craig.LeVeille@cmegroup.com

+1 312 454 5301

Product Last Change Chart Globex Vol

About CME Group

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