Get access to all our content — subscribe today 30 day free trial. Copying and distributing are prohibited without the permission of the publisher. If you wish to distribute this content please contact Christopher Hunt chunt euromoney. The non-deliverable forward NDF market has been among the fastest growing corners of the FX market, as investors looking for yield increasingly turn their attention to emerging market EM currencies. Pragma, the multi-asset quantitative trading technology provider, has added NDFs to its algorithmic trading platform, Pragma The move has ndf made possible by the increasing forexclear of trading activity onto electronic channels. Curtis Pfeiffer, chief business officer at Pragma, says: They have the liquidity, and prices are already streamed to clients electronically, so it has been relatively simple incorporating them onto the platform. NDFs are among the fastest growing parts of the FX markets. William Ndf, US head of over-the-counter OTC derivatives clearing at Credit Suisse, says: Jon Vollemaere, CEO at R5FX, the electronic trading venue for EM FX, says a lot of traders are diversifying into EMs to make up for disappointments elsewhere in their portfolios, explaining the increased interest in NDFs generally. When we set up R5, we had to build a purpose-built EM platform, with a bespoke central credit and clearing model. Also some forexclear are still mainly voice traded, which limits the use of algos. Algos need to take account of all these characteristics. In addition, EM currencies often suffer particularly aggressive volatility during periods of market stress when investors shun risk and allocate capital to safe-haven currencies, creating a stampede that can ignore underlying market fundamentals. The dramatic increase of capital to EM FX via NDFs could forexclear be storing up a problem if market sentiment shifts suddenly, for example if rising US rates reaches a tipping point and begins sucking capital out of EMs. These clients have been using Pragma to trade spot FX — and in theory should be among the most sophisticated market participants, and well prepared for any eventuality should sentiment turn. It remains to be seen what impact the growing use of algos will have on the NDF market itself, but the evidence from other asset classes is that it could lead to smaller average trade sizes, offset by a higher number of trades overall, and a rise in liquidity overall. Pragma says NDF trading with its forexclear could eventually become popular with other types of institutions, such as banks, although that would first require electronic communication networks to ndf trading in NDFs. Pragma expects to offer additional FX products, possibly FX options, eventually, but this will take a couple of years. And Pragma is not the only institution diversifying into NDFs. Hotspot recently indicated it will list NDFs on Hotspot SEF, its swap execution facility SEFpreviously called Javelin, at an unspecified time later this year. This follows its recent filing of a revised rule book with the Commodity Futures Trading Commission, setting out new technical details for the Hotspot platform. To receive similar stories, sign up for Forex emails. The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. All material subject to strictly enforced copyright laws. Pragma unleashes algo traders on NDF market. Subscribe Free Trial Log In. Solomon Teague Published on: Thursday, May 18, David Mechner, Pragma Securities David Mechner, CEO of Pragma Securities, says the move brings the same high level control and transparency clients enjoy with G10 currencies on Pragma to a wider range of currencies. The numbers are even more notable when it comes to cleared trades. Jon Vollemaere, R5FX Jon Vollemaere, CEO at R5FX, the electronic trading venue for EM FX, says a lot of traders are diversifying into EMs to make up for disappointments elsewhere in their portfolios, explaining the increased interest in NDFs generally. Hotspot says it is in the process ndf on-boarding participants to trade NDFs. Further reading on Euromoney. For this reason, your comment may not be live immediately, or may not be published. Please enter your name Your email: I have read and agree to the Terms and Conditions Please agree to Terms and Conditions above. Discover the new Asiamoney.
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