How Goldman Sachs is Transforming Eurex's FX Liquidity Hub in Europe

<p>In a
pivotal step to expand its foreign exchange (FX) offering in Europe, the derivatives
exchange Eurex tapped Goldman Sachs as a new partner to enhance the European FX
liquidity hub. The European exchange says it is a "major milestone"
for its currency business. </p><p>Goldman Sachs' Dual FX
Role at Eurex</p><p>Goldman
Sachs is joining Eurex as a member and as a <a href="https://www.financemagnates.com/terms/c/clearing/">clearing</a> member and liquidity
provider for off-book transactions. This dual role enables market participants
to maintain bilateral trading relationships while also benefiting from fully
cleared FX contracts. The arrangement facilitates the conversion of
over-the-counter (<a href="https://www.financemagnates.com/tag/otc/" target="_blank" rel="follow">OTC</a>) trades into exchange-traded and centrally cleared
contracts, thereby mitigating risks.</p><p>Jens
Quiram, the Global Head of FIC Derivatives &amp; Repo Sales at <a href="https://www.financemagnates.com/tag/eurex/" target="_blank" rel="follow">Eurex</a>, commented
on Goldman Sachs' involvement in the derivatives exchange's operations. He
noted that the financial giant's dual role would allow even more clients to
benefit from Eurex's listed FX liquidity. </p><p>"This
is another major milestone on our way to expand Europe's leading listed FX
liquidity hub," Quiram added.</p><p>In
addition, Joseph Nehorai, the Global Co-Head of Futures at Goldman Sachs,
pointed out that the growing costs in the FX markets are driving a shift toward
listed FX derivatives. This shift allows the buy-side community to enjoy the
advantages of both OTC trading and centrally cleared derivatives.</p><p>The Impact on the European
FX Market</p><p>This
partnership is a significant move for Eurex, which is part of the Deutsche
Börse Group and one of the leading central counterparties globally. <a href="https://www.financemagnates.com/tag/goldman-sachs/" target="_blank" rel="follow">Goldman
Sachs</a>' entry into Eurex's FX business will bring five essential
changes to the current European FX market operations.</p><p>First of
all, it will strengthen the local FX liquidity <a href="https://www.financemagnates.com/terms/h/hub/">hub</a>, offering better pricing and
more efficient trades. Secondly, the partnership allows for converting OTC
trades into exchange-traded and centrally cleared contracts. This is crucial
for risk management, as it eliminates the uncleared exposure of OTC trading.</p><p>Thirdly, As
the FX market evolves, a growing appetite exists for listed FX derivatives.
Goldman Sachs' support enables Eurex to effectively meet this demand, offering
the advantages of OTC and centrally cleared trading options. Fourthly, this
collaboration should enhance local market integrity and efficiency by bringing
more transparency.</p><p>Finally,
Goldman Sachs will bring global expertise but also attract a base of potential new
market participants and clients.</p><p>When the Foreign Exchange Market Is the Most Active?</p><p>A recent
<a href="https://www.financemagnates.com/forex/survey-finds-when-traders-are-most-active-it-has-nothing-to-do-with-the-markets/" target="_blank" rel="follow">study by FOREX.com</a> reveals the timing preferences of traders across different
asset classes and experience levels. The data indicates that traders are most
active during the opening and closing hours of the trading day. Specifically,
38% of Forex traders favor the first hour for executing most of their trades.</p><p>While the
preferences for other asset classes are more evenly distributed, the
overarching trend suggests that traders, irrespective of their experience,
asset type, or geographic location, are most active at the start and close of
the trading day. This information is invaluable for brokers and providers of
FX/CFD services.</p><blockquote><p lang="en" dir="ltr">The best and highest probability times to trade forex are…2-5 AM EST (London killzone)7-10 AM EST (New York Killzone)All the opportunities you will ever need will occur during these timesYou dont gotta be trading all the fuckin timeFocus</p>— Trader Mike (@tradermike1234) <a href="https://twitter.com/tradermike1234/status/1655965668896911363?ref_src=twsrc%5Etfw">May 9, 2023</a></blockquote><p>Understanding
when their clients are most likely to trade enables them to send timely alerts
about promising trading opportunities, thereby boosting overall trading volume
and client retention.</p>

This article was written by Damian Chmiel at www.financemagnates.com.