In November 2019, newly appointed Bank of Jamaica (BOJ) governor Richard Byles told us about their plans to release and develop a new foreign exchange platform in 2020. The announcement came shortly after the Jamaican dollar hit its lowest point against the U.S. dollar during that month, underscoring the BOJ’s intentions to position itself more strongly against the world market. And now, it’s finally getting the chance to do just that.
In a report by the Jamaica Gleaner just days ago, the BOJ said it is now ready to test its new Foreign Exchange Trading Platform (FXTP). After suffering delays due to the current global health crisis, the pilot testing for the new FXTP began on June 1, involving only banking institutions. Under the pilot phase of the program, these banks will use the FXTP to trade Jamaican and U.S. currency in real time.
While large companies and cambios are unable to trade during this phase, they’ll be in the program as observers. The list of observers has been provided by several umbrella organizations, such as the Small Business Association, the Jamaica Manufacturers and Exporters Association, the Private Sector Organisation of Jamaica, the Jamaica Chamber of Commerce, and the MSME Alliance. According to the BOJ, while the large corporate clients under these organizations will be unable to take part in the trades, “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.”
After the pilot phase of the testing is done, the BOJ and all the involved traders will move on to phase one. Called ‘order market trading,’ the actual first phase is when traders will be able to post offers and bids using the new platform. Traders will also have the option to do buy and sell orders and conduct such trades while being anonymous on the web.
This will pave the way for the second phase of testing, which is called ‘quote market trading.’ In this phase, the traders on the new platform will have the added option of actually contacting each other about trades. This will enable them to negotiate and settle orders without having to use communication tools outside the platform.
The third and final part of the testing phase will be called ‘external market reporting,’ in which traders on the platform will be required to report any and all trades – particularly the ones with large corporate clients – to the BOJ. This will be part of the BOJ’s plan to eventually phase out and retire its eGate system, which is what traders currently use to report daily foreign exchange market transactions. While phases one and two will happen in 2020, the third and final phase is slated to happen sometime during the early parts of 2021.
These current plans by the BOJ bode well for the country’s financial standing, especially considering how streamlined forex-related fintech is slowly but surely taking over the global market. In fact, FXCM states that many traders utilize forex robots which is becoming a more common method for both amateurs and veterans to streamline the way they participate in the foreign exchange market. Forex robots are artificial intelligence-powered platforms that enable faster and more efficient trading with any currency pair, and have helped open up the forex market. Meanwhile, another notable fintech development seeing increased use is TradingView. Designed to be a social network for forex traders, TradingView has recently partnered with HitBTC to accommodate cryptocurrency traders in its platform.
Given the rising trend of fintech developments aimed at streamlining currency trading around the world, it looks like the BOJ is on the right path to securing a stronger spot not just for the Jamaican dollar, but for local Jamaican traders as well.