This month I took part in the "Bloomberg FX Debates" series in London which focused on the current FX environment and where, potentially, the FX industry headed with financial regulations. Following the panel — and my many sidebar discussions with participants — I was reminded at how vitally important the need for choice is going to be. In particular, conference participants echoed many of the things I've heard in talks with our global client base in the past few months: "Help us navigate through the potential impacts from regulatory capital charges, clearing mandates and collateral needs so we can optimize our business and reap the greatest operational efficiencies.”
So while each client is unique and has a focus on its own needs, the marketplace as a whole is searching for solutions so each firm can choose what best fits its own model. With the regulatory changes in both the United States and Europe well underway, we continue to hear from global market participants that they need choice of clearing for both exchange traded futures as well as for clearing of their OTC FX business. We feel that CME Group, with our expanding set of global products and service offerings, is in a leadership position to best help our customers position themselves for long term success as markets adapt to a new regulatory structure.
Here are a few examples of how we have developed and evolved our offerings to help customers stay abreast of and even get ahead of the regulatory mandates and capital and margin changes.
First, let's look at our listed FX derivatives market. During the past year we have continued to see growth in our listed FX futures and options business. In February, our FX volume was up 26 percent year over year, notching multiple records in volume, open interest and client participation. And our FX options business was up 76 percent year on year, with almost 80 percent of our FX options business now trading electronically. As we look to the FX spot market, using EBS as a proxy benchmark, our futures volume growth has consistently outperformed this market going back over six years. As our listed derivatives markets have grown, so has the need for us to meet new and emerging trends in our business as our customers look to manage their FX exposure in an increasingly complex regulatory environment. Earlier this year, we launched both Indian rupee and Chinese offshore renminbi futures contracts, both of which are off to a very solid start.
Another area where we see the potential for growth is in the area of product innovation focused on client solutions. With market participants looking for new ways to manage risk and capital in an uncertain world, we have been talking with them and looking for ways to help. One example was our ability to create new products, such as Deliverable Swap Futures (DSFs). These new, hybrid products offer our customers the opportunity to trade the risk profile of an interest rate swap in the form of a standardized future, with all the financial protections and operational efficiences attendant to a standard futures contract. As such, DSFs blend the advantages of trading both futures and over-the-counter (OTC) derivative instruments in a consolidated package.
Another way is to provide new, flexible services to our global client base, such as our initiative to launch CME Europe, a new derivatives exchange in London later this year. The new exchange, which is pending regulatory approval, will begin with a suite of 30 listed FX futures as a way to tap into a new set of regional customers who need a regulated exchange to manage their FX risk. As we've traveled around Europe and Asia in the past 18 months, non-U.S. market participants have strongly articulated their need for an UK-based exchange to align with their underlying regulatory jurisdiction, and they have confirmed their support for and willingness to participate in CME Europe, which we will launch in Q2 2013.
How financial regulations evolve in the global FX market will remain an on-going discussion for the industry. For CME Group, we are committed to building and offering market participants flexibility and choice. In the coming years, we feel this will lead to greater efficiencies for everyone.
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