A view of the Noel Nethersole statue standing in front of Bank of Jamaica in downtown Kingston, Jamaica. (Photo: Miami Herald)

Bank of Jamaica to launch FX trading platform trial

A view of the Noel Nethersole statue standing in front of Bank of Jamaica in downtown Kingston, Jamaica. (Photo: Miami Herald)

The Bank of Jamaica (BOJ) will launch a pilot phase of its long-awaited electronic foreign exchange trading platform (FXTP) on June 1.

The Bank of Jamaica building in downtown Kingston. (File photo)

The platform will facilitate real time electronic FX trading and observation of trades between authorised FX traders, particularly deposit-taking institutions (DTIs) and cambios for US dollar and Jamaican dollar currency pair.

According to the central bank, the scheduled trial run launch, which will allow only DTIs to trade, will take advantage of the “delay period” brought on by the coronavirus (COVID-19). The period will also allow cambio operators to become familiar with the system as observers.

Once the pilot phase is complete, the platform will be launched formally to include all DTIs and cambios in three phases, the BOJ said this week.

The FXTP trial will be launched in three phases with the final one to conclude next year.

The first two phases, order market and quote market trading, will be introduced before year’s end.

Under order market trading, dealers will post sell (offers) and buy (bids) requests on the platform and conduct trades anonymously online. Meanwhile, quote market trading will allow FX traders to contact each other directly on the platform to negotiate and determine a bilateral basis.

The third phase, which will be implemented early next year, is external market reporting and will see FX traders report trades with large corporate clients, and trades in other currencies, to the BOJ. Once this phase is implemented, it will replace the previous eGate system used for transactions in the FX market.

“The FXTP is the latest feature in the radical, but relatively smooth process of BOJ-led FX market reform, which has so far been highlighted by the 2-part introduction (‘sell side’ then ‘buy side’) of the Bank of Jamaica Foreign Exchange Intervention and Trading Tool (B-FXITT) in late 2017/early 2018. This was followed in July 2019 by the signing of the Bank of International Settlements FX Global Code,” the Bank stated.

The FXTP is expected to further upgrade the FX market by adding even greater layers of efficiency and transparency, the central bank concluded.