R5FX: New platform for Emerging Market and NDF FX trading


R5FX, a new interbank platform for Emerging Markets FX (EMFX) went live yesterday in London for ‘Latam FX trading’.

The platform, built using Smarttrade’s technology, provides a new liquidity pool for electronically traded Non-Deliverable Forwards (eNDFs), and EMFX. The platform seeks to lead the market change from voice to screen in BRICS and N-11 currency trading.

Jon VollemaereAccording to Jon Vollemaere, CEO of R5FX (pictured at recent EMFX conference, talking about EM volatility ….time to get your ‘tin helmets on’!)

“Going live with R5FX Latam in London is an important first step, as we build out our dedicated global emerging markets platform”

“By providing EMFX participants with increased transparency, centralised credit and a further offshore alternative, we are doing more than just offering the same old trading tools, we are helping our customers to build markets. Today this is in Latam FX, which will become more widespread as we launch further currencies later this year.

Currently these currencies are traded and fixed inefficiently. The market is opaque and liable to imperfect price movements to the detriment of both banks and their customers, hence regulators desire for change. R5 is building a trading system for FX banks that not only satisfies these new legal requirements, but also specialises in the fast growing transaction volumes in BRIC and emerging economy currencies.

Vollemaere continues:

“R5FX offers both bank and non-bank venues, providing equal access to Emerging Market currencies, enabling fast and efficient trading. We chose smartTrade’s platform as it is industry proven, robust, flexible to match our needs, and provides us with the capacity to support future market growth.” full PR here

Last November, Deutsche Bourse took a minority stake in the platform at a cost of ‘single digit £mlns’, whilst more recently there is talk of several banks are also looking to take stakes in the platform.

By way of background, Non-deliverable forwards (NDFs) account for just over $68bn/day, or 2.2% of daily FX trading volumes according to the latest Bank of England FX survey data, compared to 42% share for Spot FX, and 7% share for FX Options.

FX volumes in London

Daily FX volumes in London (Bank of England Data) showing NDFs account for 2.2% of volumes shown in dotted red line

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