Fimat to launch foreign exchange futures in Poland

Fimat Group, the brokerage arm of French investment bank SG, is developing new exchange-related foreign exchange futures contracts in eastern Europe to widen its currency product portfolio for its institutional client base.

Fimat began working with the fledgling Warsaw Commodity Exchange (WGT) in February this year to launch several new currency futures contracts. The brokerage expects to begin trading the contracts next month, said Julian Knight, head of foreign exchange at Fimat International Banque in London.

As a liquidity provider to the exchange it is likely to deploy its internet-based trading platform, Fimatfx.com, to enable live streaming exchange-for-physical (EFP) prices to sustain liquidity at the exchange, he added.

“Domestically locating these contracts in eastern Europe works because retail interest in both Poland and central eastern Europe from state-related investment funds lends a natural audience to add volume to the contracts,” Knight told RiskNews' sister publication FX Week. “With the imminent membership of the European Union of these eastern European currencies and potential monetary convergence, it is anticipated that demand to trade will be high.”

A major incentive to use the new contracts is the reduction in exchange costs for users, said Knight. “Given that exchange cost is based in zloty it is naturally cheaper than other global exchanges.”

The WGT now trades both commodity and financial futures and options, covering interest rate products and six currency pairs: euro/dollar, euro/ Polish zloty, dollar/zloty, Swiss/zloty, euro/Hungarian forint and euro/Czech koruna. The currency contracts are all physically deliverable and are based on a 50,000 unit nominal size.

Many banks have been looking to boost trading in eastern European countries in anticipation that the expansion of the European Union and subsequently the eurozone will bring new markets for generating forex profits. Opportunities are expected to arise as eastern European economies liberalise in the run-up to EU membership and from speculators deploying convergence trading strategies.