The One Page Pitch for Brokers

Offer more to your clients with CME Listed FX Options

As trading costs, regulatory oversight, and conduct risk pressures continue to increase, CME listed FX options help participants across the globe resolve their trading and execution challenges.

Improving Execution Costs: Solving for TCA

Address some of the increasing fiduciary responsibilities and regulatory requirements by improving TCA for FX options.

For your clients:

A 50% reduction in exchange fees is in place until June 30, 2021 for all large CME FX option trades ‒ whether traded electronically, by blocks, or in the pit. A large trade is defined as those meeting the block threshold.

For your firm:

Brokers intermediating FX options trades, by matching two counterparties, can register themselves for exchange rebates of up to $1.40/lot (c $11/mn of notional intermediated on major currency options).

Give-up fee waived for all FX option trades adding increased efficiency to a broker/execution desk workflow.

Via our all-to-all, anonymous Central Limit Order Book offering credit agnostic pricing:

  • Ability to execute passively helps clients match at mid or use resting orders to avoid paying spreads
  • Access firm liquidity with no last look
  • Transparent book depth levels provide clarity with TCA
  • Block trading available to execute large size and leverage bilateral trading relationships
  • A deterministic auto-exercise process – which is more efficient as it eliminates notification risk, reducing operational risk
  • Rule-based expiry and no contrary instruction offers greater certainty of maturing positions
  • Greenwich Associates reports that most market participants can potentially save up to 70% in execution costs by trading listed FX options.

Margin and Capital Efficiency: Solving for UMR Compulsory Exchange of Initial Margin and Variation

Compulsory exchange of margin on FX options under Uncleared Margin Rules (UMR) will capture more clients as qualifying exposure thresholds are reduced in September 2021 and 2022. This impact will be felt both directly, through the costs and overheads of posting margin for the first time, or indirectly, as the increased costs impact FXPB fees and trading costs.

  • CME FX options offer potentially significant netting benefits against a central counterparty and far more favorable initial margin calculations. A recent study by Greenwich Associates says that investors can save up to 89% of their funding costs by replacing their OTC options positions with listed alternatives.
  • Availability of portfolio margining and sizeable offsets across products and asset classes

Credit and Operational Efficiencies: Solving for the Headwinds

  • OTC credit, either bilaterally or through the FXPB model, is becoming scarcer and more expensive for many participants
  • Participants can overcome these challenges as listed FX options are easier to access through the FCM model
  • Listed FX products offer a regulatory and operational respite through the centralized clearing model which reduces credit adjustments and capital charges applicable for trading

Product Innovation: Solving for your Clients’ Needs

  •  CME FX options on G5 currencies expire at the NY Cut (10 a.m. NY time) 
  • Choice of weekly, monthly, and quarterly options filling the first 12 months of the curve
  • Increased strike granularity for options near the money and expiry for precise risk management 
  • Ability to trade by voice or electronically, either directly on the electronic order book or by leveraging a broker for block execution
  •  In listed FX options, block reporting times have been relaxed to 15 minutes, and block thresholds have been reduced for multi-legged trades
  • Manage your delta in the liquid FX futures marketplace, or use spot and leverage FX Link to move the hedge to clearing.

A Growing Marketplace with Diverse Participants: A Liquid Solution

CME listed FX options trade an average daily volume of $7 billion with average open interest of more than $70 billion (Q1, 2020). The number of large open interest holders in FX futures and options has risen by over 40% in the last five years, reflecting a growing marketplace which continues to attract new institutional clients globally. Listed FX options liquidity continues to demonstrate increasing resilience, allowing buy-side clients to execute large orders (circa $1 billion in notional) over short time windows without any severe price impact.

Contact your relationship manager to find out more about
CME FX options or contact the

About CME Group

As the world’s leading derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.

Follow us for global economic and financial news.

CME Group on Twitter

CME Group on Facebook

CME Group on LinkedIn