“Liberation Day” Brings High Volumes, Benchmark Delay, in FX Markets

The so-called “Liberation Day” when President Trump unveiled a long – and at times bizarre (Heard and McDonald Islands actually have no residents or exports!) – list of tariffs, prompted widespread mayhem in financial markets and a surge in volumes in FX markets, which appeared to handle the chaos well although there was a delay in the publishing of the WM 4pm Benchmark Fix.

360T, Cboe FX and Euronext FX, both hit new highs for daily spot volume, with Cboe FX printing $104.7 billion on 3 April (it followed up with $99.7 billion on 4 April), significantly above its previous high set during the onset of the pandemic. 360T reports daily volume of $59.4 billion, a new high, and followed up with its second busiest day at $56.4 billion. Euronext FX printed just over $58.4 billion (following up with $57.3 billion), again, the two busiest days the platform has had.

EBS also recorded its highest daily volume since 19 March 2020 at $147 billion, this was part of over $326 billion traded on CME’s FX futures, options and OTC platforms. As a whole, CME Group saw $122 billion printed in EUR/USD alone, and $67 billion in USD/JPY – it was also a good day on CNH, with the group printing $27 billion. CME’s FX Link also hit a new high, with over $13 billion traded, which is probably a nice boost to CME as it approaches the launch of its new venue Spot+.

Although the mayhem hit all markets, NDF volumes were mixed, with Cboe SEF printing two days above $4 billion ($4.8 billion on 4 April), significantly above its average this year around $2.7 billion, while 360T recorded two days just above $2 billion, which is very much in line with its average year-to-date.

Rumours did spread of a brief outage at one platform, however this cannot be confirmed, overall, dealers report a very hectic, but functioning market, with one suggesting things settled down after an initial surge in activity. “We saw initial dollar buying in a thin market, which spooked the market a little, but it soon became apparent that the direction of travel was down for the dollar and we were able to price accordingly and keep liquidity flowing,” reports one e-trader in Asia.

Benchmark Delay

One area that did appear to have a problem was the publishing of the WMR benchmark rate from 4pm London, with multiple dealers reporting problems. According to several sources, the 4pm Fix was not published until around 8pm London time due to technical problems. “This was more of an administrative headache than market problem,” says one asset manager source. “Our banks couldn’t provide us with the rate we had traded at but we knew we were covered. It triggered significant reporting delays but didn’t negatively impact any funds.”

The delay has prompted some introspection on the part of service providers, especially banks, however, with two sources saying they have been interrogated by their risk function over the lack of a back-up plan. “The problem is that our customers are locked into the WMR Fix,” says one banking source. “If that goes wrong it’s hard to know what else to do, unless they change the documentation to allow substitutes.”

Another banker observes, “The market should be grateful this didn’t happen earlier in the week at month-end – that could have been chaos given the amounts involved. We were able to reassure customers their hedges were done, but not the rate at which they were executed. This is probably a wake-up call for the FX market that it needs a fallback on the WMR benchmark – it’s becoming an even bigger part of the business, so needs to be looked at.”