Morgan Stanley has entered the listed FX business through European derivatives exchange Eurex.
The global financial services firm joins a list of market participants at Eurex who are moving their business to the exchange or combining over the counter (OTC) and exchange-listed FX trading through the use of Exchange-for-Physical (EFP) services.
According to Eurex, asset managers are increasingly seeking to combine the depth and flexibility of FX OTC markets with all the benefits of centrally cleared listed FX products.
Asset manager can swap OTC trades into exchange-traded and centrally cleared contracts through the use of EFP services, removing uncleared exposure while also optimizing capital allocation.
“Asset managers in Europe are recognising that the EFP mechanism is a simple yet dynamic way to enhance their workflow while deepening their liquidity pool,” said Richard Condon, managing director, head of FX investor sales at Morgan Stanley.
“The intersection of OTC liquidity, FX-specific execution strategies, and high-quality market making all wrapped in a cleared instrument has a powerful value proposition. Central clearing can also reduce the need for bilateral credit, settlement relationships or lengthy onboarding cycles.”
Jens Quiram, global co-head FIC derivatives and repo sales at Eurex added: “With SA-CCR and UMR regulations coming into effect, these services provide a cost-effective solution to mitigate the impact of these rules.”