Cboe FX SEF

Cboe FX SEF is a Swap Execution Facility (SEF) registered with the Commodity Futures Trading Commission (CFTC). It operates in the Non-Deliverable Forwards (NDF) market, providing a platform for trading foreign exchange derivatives.
== Features ==
The Cboe FX SEF offers several key features:
=== Trading Mechanisms ===
The platform provides a fully anonymous Central Limit Order Book (CLOB) with firm all-to-all trading available to all participants. Additionally, it offers configurable firm and non-firm streaming quotes to meet various liquidity needs, allowing for tailored trading experiences.
=== Liquidity ===
Cboe FX SEF maintains a diverse network of participants that provide passive liquidity. It also offers a wide distribution network for market makers.
=== Risk Management ===
The platform incorporates pre-trade Net Open Position (NOP) credit checks and real-time risk management tools.
=== Standardization ===
Cboe FX SEF uses EMTA-standard contracts for its NDF trades.
== Infrastructure and Technology ==
Cboe FX SEF has made significant investments in its infrastructure and technology to enhance its services and global reach:
=== Global Expansion ===
In January 2023, Cboe launched a Point-of-Presence (PoP) at the Equinix TY3 data center in Tokyo. This expansion extended access to Cboe's infrastructure in the Equinix NY5 data center from the Asia-Pacific region. The PoP offers high-speed connectivity with a low latency of 137 milliseconds to real-time market data and order entry for both Cboe FX and Cboe SEF.
=== London Matching Engine ===
To serve customers in Asia and Europe, Cboe SEF launched a London matching engine in the Equinix LD4 data center. Asian currency pairs account for a substantial portion of Cboe SEF volumes.
=== Matching Engine Re-architecture ===
In response to continued growth in Spot FX and to improve platform performance and resiliency, Cboe completed the first phase of a Spot FX matching engine (ME) re-architecture. This upgrade resulted in a reduction in latency and included the initial rollout of a second ME instance. Currency pairs are now balanced between the two ME instances based on their activity level.
== Market Performance ==
In 2023, Cboe FX SEF recorded an average daily volume (ADV) of $1.1 billion during the year, compared to $836 million in 2022 and $406 million in 2021, showing a consistent upward trend in trading activity.
== Future Developments ==
Cboe FX SEF has outlined plans to focus on scaling its NDF platform in 2024. With matching engines in New York and London, and a range of functionality including Full Amount and Hidden Pegs.
== Market Structure ==
As a CFTC-registered Swap Execution Facility, Cboe FX SEF operates within the regulatory framework established for over-the-counter derivatives trading in the United States following the Dodd-Frank Wall Street Reform and Consumer Protection Act.
== Adoption of Industry Standards ==
Cboe FX SEF has adopted the FX Global Code, which is a set of global principles of good practice designed to promote the integrity and effective functioning of the wholesale foreign exchange market. By adhering to this code, Cboe FX SEF demonstrates its commitment to maintaining high standards of conduct and promoting fair and transparent trading practices.
=== Regulatory Compliance ===
The Statement of Commitment to the FX Global Code is part of Cboe FX SEF's comprehensive framework to ensure compliance with global regulations and industry best practices. This commitment helps Cboe FX SEF align its operations with internationally recognized standards, which is crucial for a CFTC-registered Swap Execution Facility operating in the global FX derivatives market.
=== Market Participant Status ===
By signing the Statement of Commitment, Cboe FX SEF confirms its status as a Market Participant as defined by the Code. This acknowledgment signifies that Cboe FX SEF recognizes its role and responsibilities within the FX market ecosystem.
== References ==
Category:Swap Execution Facility
Category:Cboe Global Markets
Category:Foreign Exchange
Category:Derivatives