BOJ readies for launch of electronic fx trading platform

BOJ readies for launch of electronic fx trading platform

Tuesday, May 26, 2020

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KINGSTON, Jamaica — The Bank of Jamaica (BOJ) says it will be introducing a pilot phase of the highly anticipated Foreign Exchange Trading Platform (FXTP).

The bank said this will be available on June 1 and will allow deposit taking institutions (DTI) to trade while cambios will be able to familiarise themselves with the system as observers.

The actual platform is expected to facilitate real time electronic foreign exchange trading and observation of trades between all authorised FX traders - namely DTI's, and cambios for the USD/JMD currency pair.

In a press release this afternoon, the bank said the pilot is being introduced to make productive use of the delay of the long-awaited platform.

“The intended implementation of the platform this year has been slightly delayed by the systemic impact and distraction of COVID-19, plus the need to fine-tune the system to accommodate specific internal compliance requirements of DTI's,” the BOJ said.

The bank added that these DTI requirements include limits on exactly how much FX they can trade with non-DTIs, and so to facilitate seamless trading when the system is implemented, protocols will be built into the system for each cambio that a DTI may trade with.

For greater transparency, the BOJ said a select list of large corporate clients involved in buying and selling FX has been provided by the relevant umbrella organisations to be added to the system as observers.

“While they will be unable to take part, these observers will be able to see all daily trades in real time which will help them make informed decisions when approaching the market to buy or sell foreign exchange,” the bank said.

The BOJ noted that after the pilot phase, the actual platform, including all authorised FX traders (DTIs and cambios), will be introduced gradually, in the following order, in three phases:

  1. Order Market Trading – the pilot will mimic activities in this market. In this first phase, dealers will post sell (offers) and buy (bids) requests on the platform and conduct trades anonymously online.
  2. Quote Market Trading – in addition to the order market, FX traders will be able to contact each other directly within the FXTP to negotiate and settle on a bilateral basis.
  3. External Market Reporting – in addition to the first two phases, this is the phase where FX traders will report to BOJ trades with large corporate clients as well as trades in other currencies. With implementation of this third phase, FXTP will effectively replace BOJ's longstanding eGate system, which is currently being used for reporting all daily transactions in the FX market.

The bank said phases one and two should be introduced before the end of 2020, while the final component, phase three, should be introduced in early 2021.

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