Morgan Stanley expands listed FX offering with Eurex trading

In making the move, the bank cited a “market trend towards increasing listed FX business”.

Morgan Stanleys introduction of the service follows pressure from regulators and some market participants, notably exchanges, for FX derivatives trading to shift to listed platforms from murky over-the-counter (OTC) markets.

Eurex is a derivatives exchange headquartered in Frankfurt and owned by Deutsche Börse.

The company told Reuters that while it had previously offered listed FX derivatives trading, the addition of Eurex was “a key evolutionary step in the expansion of our footprint into Europe.”

While listed FX derivatives share of the market is tiny – 1% to 2% of global FX derivatives trading – it has grown rapidly in recent years.

Market players are increasingly using both means of derivatives trading in tandem, benefiting from the depth available in OTC and from listed FX products central clearing of contracts, which is seen as more transparent and efficient.

Increasingly difficult market conditions are also contributing to asset managers moving towards listed FX.

“The market is looking for efficiencies, also driven by increasing funding and capital costs, and (by) the fact that therefore liquidity is partially shrinking and spreads are widening,” said Jens Quiram, global co head FIC derivatives and repo sales at Eurex.

Eurex recorded its highest daily FX trading volume in June, on a day when more than 162,000 contracts were traded through the platform, including a single block trade of nearly 5.9 billion euros.

Contracts traded through the Eurex FX platform so far this year stand at about 820,000, up 190% on the same period of 2021.