Diversified exposure to a dozen worldwide economies

CMC Markets has today further expanded its range of bespoke indices. In all, 12 new forex baskets have been added to the platform, offering clients a convenient way to gain a diversified exposure to a dozen worldwide economies.

The new indices are bespoke to CMC Markets, and in-house management allows the company to ensure the composition is always relevant, as well as providing transparency in terms of pricing.

The indices have been constructed on a trade-weighted basis, with the stability and liquidity of each currency pair within the index being taken into account. This helps ensure consistent pricing can be delivered, even in volatile markets, while the maximum weighting of any one cross has been capped at 40% to prevent any undue influence from a single currency pair.

Simon Campbell, Group Head of Trading, commented: “We are continually working with our clients to ensure we deliver a product suite which allows them to trade in exactly the way they want. The increasingly complicated geopolitical landscape is creating a range of trading opportunities, and these new indices give CMC clients the potential to gain broad-based exposure to a number of distinct economies, from the eurozone or US, to countries like Sweden, Norway or Singapore.”

Trading on a single pair or cross can leave clients exposed to adverse movements on the opposing currency, something which can be avoided by trading an index.

As an example, trading GBP/USD over Brexit offers exposure to sterling, but leaves clients vulnerable to an unexpected move on the US dollar following events such as an announcement from the Federal Reserve, or news of progress in US-China trade talks.

The newly-created CMC GBP Index allows clients to trade on the pound against a weighted combination of the US dollar, Chinese yuan*, euro, Swedish kroner, Canadian dollar, Swiss franc, Japanese yen and Norwegian kroner, all in a single transaction.

In addition to sterling, CMC’s other forex indices are based on the following base currencies: euro, US dollar, Canadian dollar, Japanese yen, Chinese yuan, Singapore dollar, Australian dollar, New Zealand dollar, Norwegian kroner, Swedish kroner and Swiss franc.

CMC Markets will also continue to quote a price for its legacy US Dollar Index instrument under the existing name.

• More information and precise weighting details of each index here 

*Chinese yuan reflects the offshore traded CNH product