Cboe FX 2022 Recap and Look Ahead

Cboe Blog
February 10, 2023

It was difficult to imagine we would face greater challenges than those experienced in 2020 and 2021, but 2022 made a good go of it. From geopolitical unrest, to macroeconomic challenges exacerbated by the turning point in the interest-rate and inflation cycle, an energy crisis and the ongoing effects of the pandemic, there was plenty for us all to contend with – personally and professionally.

As an industry, we could take comfort from the ability of FX markets to withstand these challenges and allow risk transfer to take place at record volumes amid the turmoil. It was also fantastic to meet regularly in-person with so many of you again. Your continued support helped us navigate all the challenges we faced and continue to grow.

The year just gone…

The wider challenges aside, Cboe FX continued its growth momentum in 2022 and in spot FX it was our best year on record, with a market share of 18.4% through December. Our Full Amount offering, which provides clients with a solution for larger order execution with low market impact, had another strong year. Full Amount ADV topped $12.3 billion in 2022, representing a 28.0% increase year-over-year.

We continued to lead with transparency, something we took to the next level in August by only allowing liquidity providers that had signed a statement of commitment to the FX Global Code to stream prices on our Full Amount platform. We also continued to publish granular volume and liquidity statistics on our website, including 30-day rolling firm volumes and hourly/daily non-firm fill rates. We saw a significant increase in firm trading, which accounted for 44.2% of total volume executed on the Cboe FX ECN on average in 2022, compared to 40.1% in 2021. Non-firm fill rates continued to remain high at 87.0%.

Yet again, non-deliverable forward (NDF) volumes on Cboe SEF grew significantly, with annual ADV of $836 million, compared with $406 million in 2021.

Our market share growth was the result of increasing adoption across our suite of liquidity solutions. We continue to differentiate ourselves from the competition by offering a range of different trading solutions and order types to meet different investor needs and trading strategies.

...and looking ahead

While markets likely will face uncertainty in the year ahead, we will remain committed to bringing innovative solutions and choice to the market. We certainly believe 2023 will see our clients focus even more on transparency, analytics and data to better measure their execution quality, which bodes well for us.

We will be concentrating in particular on further growth of our NDF platform, which now offers the same range of functionality as our spot markets do, including Full Amount and Hidden Pegs. Our focus will be on encouraging adoption of these order types in this fast-growing market. In addition, as part of Cboe Global Markets’ global expansion, we are excited to provide connectivity through a Tokyo point of presence in early 2023.

Finally, asset class diversification will be front and centre in 2023. In 2022 we announced our plans to launch an interdealer US Treasuries trading platform, enabling us to bring the best of what we do in FX to the US Treasuries market in terms of a quantitative approach to liquidity curation and proven matching technology. We have secured regulatory approval from the SEC and FINRA for the platform, built a world-class trading system and are currently onboarding clients. We continue to receive very positive feedback on this initiative to introduce an innovative dealer-to-dealer Full Amount platform, addressing a market need for effective large order execution that is not currently met by incumbents. We are confident that volumes will grow over the course of 2023.

Learn more about Cboe FX and view our stats here.