CME to launch weekly Wednesday FX options

The CME Group is launching a new set of weekly foreign exchange options that will expire on Wednesdays. It will be available in premium-quoted and volatility-quoted European-style options, with a 2pm central time fix on five pairs.

The exchange already offers weekly FX options that expire on Fridays. The new contracts, dubbed Wednesday options, will be available in AUD/USD, GBP/USD, CAD/USD, EUR/USD and USD/JPY.

The Wednesday options will be available for trading and clearing on October 30, 2017, pending regulatory approval, the CME stated in a press release. Market participants trade weekly options to better manage currency risk during the trading week.

“Our clients want to further refine their exposure to mid-week announcements from the Federal Reserve, Bank of Canada and Reserve Bank of Australia’s meetings before the end of this year,” said Paul Houston, global head of FX at CME Group.

“More broadly, as event-related trading activity continues to grow, they are looking for the additional granularity of these short-dated FX weekly options, as well as the ability to leverage capital efficiencies and spreading opportunities available in our markets,” Houston added.

Average daily volumes in the existing weekly FX options offering have reached a new record in September 2017, with 31,990 contracts traded. This represents more than 76% of growth when compared with September 2016.

The exchange already offers Wednesday Weekly options in other asset classes, including Treasury options, which launched in June 2017. It traded more than 1.1. million contracts in September.  

“Amid ongoing geopolitical uncertainty, market participants continue to turn to CME Group’s diverse product suite to manage risk,” the group’s press release stated.