Cboe FX 2023 Yearly Recap and Look Ahead

As we start a new year, we wanted to recap some of our key achievements in 2023 and provide an update on what to expect from us in 2024 to help support your FX trading needs.

The FX industry was presented with a challenge in 2023 to live up to its record-breaking volumes of 2022, but Cboe FX was able to produce year-over-year growth. We gained market share through increased adoption of our services from existing and new clients. As our platforms grew, we continued to invest in new products and our technological scalability. We expanded geographically, led with transparency and laid the groundwork for our expansion into U.S. Treasuries.

We couldn’t have achieved any of these milestones without your support, feedback and counsel throughout the year – so thank you and we look forward to working with you in 2024.

2023 Highlights

A few volume highlights include:

• We achieved an ADV of $43.6bn in spot products during 2023, which translated into a record 20.0% market share (including an all-time high market share high of 22.5% in October). This was up on the 17.6% share we achieved during 2022, when ADV was $40bn.
• Our Full Amount offering, which provides clients a solution for larger order execution with low market impact, had another strong year. Full Amount trading ADV was $13.7bn during 2023, which compared with the 2022 average of $12.3bn and the 2021 average of $9.6bn.
• Non-deliverable forwards (NDF) trading on Cboe SEF, our swap execution facility, recorded an ADV of $1.1bn during the year, compared with averages of $836mn in 2022 and $406mn in 2021.
• The share of firm, instantly executable volume continues to grow on our ECN. We reached a record 47.9% in 2023, surpassing 2022 (43.7%) and 2021 (39.6%).

Equally impactful were the significant investments we made in technology during 2023, improving our resilience and increasing capacity for our future growth in the months and years to come. Some of the highlights include:

• TY3 Point-of-Presence (PoP): We launched a PoP at the Equinix TY3 data center in Tokyo in January 2023, extending access to Cboe’s infrastructure in the Equinix NY5 data center from the APAC region. The PoP offers high speed connectivity (with a low latency of 137 milliseconds) to real-time market data and order entry for Cboe FX and Cboe SEF.
• Cboe SEF London Matching Engine: We launched a London matching engine in the Equinix LD4 data center for Cboe SEF. With Asia currency pairs accounting for a significant portion of Cboe SEF volumes, this new matching engine enhances our service to customers based in Asia and Europe.
• Matching Engine Re-architecture: In response to our continued growth in Spot FX and as part of our ongoing commitment to improve our platform performance and resiliency, we completed the first phase of a Spot FX matching engine (ME) re-architecture. This resulted in a meaningful reduction in latency and included the initial rollout of a second ME instance. We have balanced our currency pairs between the two ME instances based on their activity level.

Focus for 2024

Looking ahead to this year, we remain committed to leading with transparency and product innovation.

Given our position as a market leader in spot FX, we are looking to offer unique market data products that will complement our trading services.

We will also concentrate on scaling Cboe SEF, our NDF platform. We are now extremely well positioned for further growth, with matching engines in New York and London, the same range of functionality as our spot markets – including Full Amount and Hidden Pegs – and a critical mass of customers. Our focus will be on encouraging adoption of these order types in this fast-growing market.

We are also excited to drive further growth and adoption of our interdealer U.S. Treasuries trading platform. This platform recorded its first trade in October, and we have a strong pipeline of liquidity providers and ISVs ready to connect. 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 2024.

Lastly, we believe our expertise in taking a quantitative approach to liquidity curation and proven matching technology can be applied to other asset classes and products, and we will continue to explore these opportunities in 2024.

We are grateful for your business and continued support and look forward to working with you in 2024.