The average daily notional value (ADNV) of spot forex traded on the Chicago Mercantile Exchange (CME) Group’s Electronic Broking Services (EBS) jumped by 30% to $76.3 billion in September 2022.

The ADNV also rose by 31% year-on-year (YoY) last month from the $58.2 billion recorded in September 2021.

These figures are contained in details shared with Finance Magnates and the September 2022 market data released by CME Group on Tuesday.

The EBS is a wholesale electronic trading platform for forex trading with market-making banks and is owned by the CME Group.

‘Strong Overall Performance’

According to Jeff Ward, the Global Head of EBS, forex spot average daily volume (ADV) on the EBS Market G3—which accounts for forex trades in US dollar, Japanese yen and euro—shot up by 34% month-on-month (MoM) and 49% YoY.

Jeff pointed out that the USD/JPY pair was particularly strong during the past month as the pair marked its largest day since November 2016 on the EBS Market on September 2022.

“Nearly five times the average daily volume for USD / JPY for 2022 was transacted including US$18.5 billion (single count) vs. the Japanese Yen in the single hour between 8am and 9am GMT,” Ward said.

Sharing further details, EBS said forex spot in Chinese yuan (CNH) on EBS Market rose 14% MoM and 22% YoY.

It added that trading in CNH surged in the final week of September recording “double of its year-to-date ADV levels amid heightened volatility
Volatility

In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets.

In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets.
Read this Term.”

Furthermore, the wholesale electronic trading platform disclosed that the EBS Market non-deliverable forwards rose 29% and 41% last month and from the same period last year, respectively.

The EBS Direct spot also increased 21% MoM and 18% from September 2021, the platform said.

“EBS Direct Forwards set a record month and two new record days up 55% year-on-year versus September 2021 due to increased client adoption and a more active rate environment,” Ward said.

Speaking on the overall EBS market, Ward noted that the wholesale electronic trading platform recorded “strong overall performance in September versus both prior month and September 2021.”

The EBS exectuvie believes this is a continued reflection of “the value and role of the primary market central limit order book in managing risk in more volatile and uncertain market conditions.”

eFix Matching Service

Meanwhile, EBS said volumes transacted through its eFix Matching Service recorded the fifth largest monthly volume since its launch in 2014.

Volume on the central electronic market utility which helps to cushion benchmark fixing risk increased 8% from the performance recorded in September 2021.

Furthermore, EBS said end-of-month trading pushed eFix to its fifth best day since launch at $18.5, adding that the utility’s top five days were recorded this year.

Ward believes these records demonstrate “the criticality of eFix in the management of fixing risk.”