Cboe Global Markets

Cboe FX's 2021 Outlook

February 2, 2021

As we embark on a new year, we wanted to take this opportunity to thank you all for your support over the past 12 months - a period we’re sure no one will be able to forget in a hurry.

Although it may be a while yet before we return to some sort of normality, we wanted to start the year on a high note by recapping some of our key achievements and providing an update on what to expect from us in 2021 to help support your FX trading needs.

A Growing Piece of the Spot FX Pie

2020 was an exciting year for Cboe FX and our best on record, with market share exceeding 16% during the calendar year for the first time*. While FX trading volumes were up across the board, we’re pleased more and more market participants are turning to Cboe FX to execute their FX trading strategies. Cboe FX achieved average daily volume (ADV) of $34.7 billion in 2020, including our biggest day ever on March 9, with volumes of $83.6 billion. We closed the year with a strong Q4 ADV of $34.2 billion, a 14% increase versus the prior year.

We believe our market share growth was the result of our focus on innovation and continuous enhancement of our liquidity solutions, an area where we have markedly differentiated ourselves from the competition. 

Our Full Amount offering, which provides clients with a solution for larger order risk transference with low market impact, has really led growth in our spot offering. Full Amount ADV topped $7.8 billion in 2020, representing a 24% increase year-over-year. 

Innovation in FX Spot

As previously mentioned, innovation was a major focus in 2020, as we rounded out our suite of services to meet the diverse needs of the FX trading community, covering all aspects of how our clients interact in the market. Our hidden peg functionality and the mid- match enhancement have been particularly successful this year.

Another key initiative in this regard was the launch, in June, of Cboe FX Central, a new central limit order book bringing competition and innovation to the FX “primary” markets. The platform advanced on the traditional CLOB model by rewarding liquidity providers with faster market data when their liquidity is at or close to the best bid or offer (BBO), creating a deeper book. This represents a more democratic model to access real-time data compared to primary markets, where data is provided to those that execute a certain monthly volume threshold. We continue to receive very positive feedback on this launch, and over $1 billion traded on its biggest day on 14 September.

A further noteworthy development during the year was an agreement with Refinitiv in the third quarter, allowing clients to access Cboe FX liquidity through their proprietary Eikon Terminal, expanding our reach into new regions.

We also continue to lead with transparency, particularly on firm and non-firm liquidity available on Cboe FX. We continue to publish more granular volume and liquidity statistics on our website, including 30-day rolling firm volumes and hourly/daily non-firm fill rates. Firm trading accounted for 46% of total volume executed on the Cboe FX ECN at its peak in October and 40% on average in 2020, while non-firm fill rates were consistently above 81% throughout the year.

Expanding our Non-Deliverable Forward Opportunities

We also expanded our NDF offering beyond Cboe SEF with the launch in October of Cboe Swiss, a new off-SEF venue designed to open unique liquidity opportunities for our clients in emerging market NDFs. Cboe Swiss offers trading in the most actively traded emerging market currencies, including the South Korean Won (KRW), Indian Rupee (INR), Brazilian Real (BRL), and Chinese Renminbi (CNY). Key features of Cboe Swiss include: Streaming firm and non-firm quotes from a diverse set of institutional counterparties; flexible order types for improved execution quality; and commitment to the principles of the FX Global Code.

2021 Vision

There is likely to be continued uncertainty in the year ahead, as a result of the disruption caused by the ongoing Covid-19 pandemic and as the industry navigates the post-Brexit environment and a new administration in the US. We are committed to growing liquidity on our newer venues (Central, Cboe Swiss and Cboe SEF) and bringing innovative solutions to the market to help you achieve your FX trading needs. In particular, look out for further enhancements to Central in the coming months, as we plan to introduce a series of new features.

We remain grateful for your business and continued support, and we look forward to working with you in 2021.