Trading activity in blocks and exchange for related positions (EFRPs) across CME Group’s listed FX products is up more than 280 per cent for the year-to-date versus the same period in 2021.

The activity has contributed significantly to the total average daily trading volume of USD110.9 billion during March, with FX options volumes in contract terms increasing to 21.7 per cent in 2022 compared with March 2021.

Over 20 liquidity providers are able to facilitate blocks, large privately negotiated trade orders, and EFRPs, whereby cleared, listed futures positions are exchanged for related OTC positions or vice versa. Blocks and EFRPs allow CME Group clients to lean on OTC liquidity and trade on a disclosed, relationship basis against chosen liquidity providers to access clearing for FX forwards, NDFs and FX options.

Liquidity providers can also gain potential benefits around margin, capital and freeing up of bilateral credit lines while still maintaining their client relationships and winning client trades. Regulations including the Standardised approach for counterparty credit risk (SA-CCR), reforms to how banks calculate their capital requirements for counterparty credit risk, and the Uncleared Margin Rules (UMR), which force significant changes to the way collateral is posted as initial margin for OTC derivatives, are also contributing to the growth in the utilisation of blocks and EFRPs.