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Replicating OTC FX Market Positions with CME FX Futures

In today’s evolving regulatory environment, traditional market practitioners in the OTC FX markets are seeking solutions to mitigate the additional burdens that come with new regulation.

While the implementation of new market regulations (such as Basel III and MiFID II) are intended to protect OTC market practitioners, the new frameworks will also make it more difficult for many participants to transact in the OTC FX markets. For practitioners seeking capital and cost-effective means to address new requirements, CME FX futures offer an attractive alternative to many OTC FX trading strategies.

This white paper explores the advantages that CME FX futures offer traditional market practitioners in the OTC FX markets. It further examines how CME FX futures can be used to replicate cost-efficient, manageable synthetic exposure to OTC FX spot, forward, and swap transactions.