Mexico Derivatives Market Sees High-Frequency Currency Trading Soon

As reported by Wall Street Journal, Mexico’s derivatives market could see its first high-frequency trading of its dollar futures contract in coming months as the local market enters the second phase of its tie-up with the Chicago Mercantile Exchange with north-south order routing, the head of the Mexican derivatives market MexDer said Tuesday.

On Monday, MexDer, a unit of Bolsa Mexicana de Valores SAB (BOLSA.MX) and CME Group Inc. (CME) entered the second phase of their order-routing system, giving customers in the U.S. direct access to MexDer contracts. South-north trading began in April.

MexDer Chief Executive Jorge Alegria said at a news conference that the principal local contracts of interest to foreign investors are futures on the stock market’s benchmark IPC index, and futures on Mexican fixed-rate government bonds, or Mbonos.

A third contract that is generating interest is MexDer’s dollar futures contract, with the likelihood that orders from investors abroad will bring high-frequency trading–the use of automated trading technologies.

Alegria said Mexico has seen high-frequency trading in equities and fixed income, but so far not for currencies. “We hope to have the first within the next two months,” he said. “Currency derivatives in organized markets have grown a lot… MexDer won’t be the exception.”

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