Time for Reuters to vocalise on NDFs

The introduction of NDF trading on the spot broking system is expected to garner a lot of support, with approximately 50 banks due to be playing a role in today's launch. Indeed, the launch of the non-deliverable products on the system has been a long time in the making, with won NDFs - the first to be tested - having undergone a year-long pilot on EBS Spot. This pilot phase also included the time taken for system testing, the broker said.

The fact that it took a year to test the product and systems indicates the greater complexity involved when transitioning emerging markets products from voice trading to the electronic world. It also illustrates perhaps the time required to ensure local regulators are totally comfortable with what is trying to be achieved.

According to the Bank for International Settlement triennial survey released last September, trading in emerging market currencies accounted for almost 20% of all transactions - valued at $3.2 trillion - in April 2007. So the fact that nearly all major platforms and brokers have made some inroads by this stage to launch NDF trading comes as no surprise as the products increasingly move online.

But what does come as a surprise is that the self-proclaimed leader in electronic broking in emerging markets, Reuters, has yet to launch trading in NDFs. The broker said it is working closely with its customers and the relevant regulatory bodies to launch NDFs on the Reuters Dealing 3000 Matching platform. These plans support Reuters' ongoing efforts to be the leading electronic broker in the emerging markets, the broker said.

However, Icap, which owns EBS Spot, said in the course of all its business it too is always in close contact with regulators.

Regardless, whether Reuters may have lost an advantage to its arch rival by launching NDF trading a month, or three, later it's too early to tell, particularly as Icap only began piloting the non-won NDFs a couple of weeks ago. But it would seem that Reuters may be missing a pretty simple trick in the book - marketing its plans.

Arguably, the electronic broker's strategy to build out its broking services can sometimes seem vague at best. The lack of information towards this initiative may be another one of those times.