FX HedgePool Hits $200 Billion Mark at May Month-End
Posted by Colin Lambert. Last updated: June 23, 2021
FX swap mid-market matching service FX HedgePool says it exceeded $200 billion in matched notional volume on May 31.
The firm says that on that day – a month-end as well as a UK and US holiday – many index tracking managers faced a multitude of risks by forcing currency valuations into a market where liquidity was constrained, and spreads were significantly wider than normal conditions. It adds, that by creating a stable community of members with naturally offsetting positions, FX HedgePool enabled its members to source liquidity from each other, thus eliminating the need for trades to be priced in the market.
“Although the FX basis market remained stable on the public holiday, market makers preferred to hold overnight risk in an attempt to clear in more liquid environments,” says James Davison, Americas distribution at FX HedgePool. “However, this requires dealers to charge a risk premium in the form of wider spreads which results in degraded performance for the global asset management community.”
Jay Moore, CEO and founder of FX HedgePool, adds, “Ultimately, it comes down to performance. We have created a model where market conditions don’t dictate the costs of trading. Instead, we offer reliable liquidity at known costs, which is what investors, like you and me, want.”