FEATURE
While high frequency trading is growing in other sectors, it hasn’t taken off in the FX options market, according to Schmuecker.” Te Chicago Mercantile Exchange (CME) has 5% of the market liquidity, and there is no other electronic venue in FX options that has the kind of liquidity needed for high frequency trading. Te current market structure is not suited to high frequency trading and the complexity of the product, the way it is quoted and how it works, is slightly less suited to this form of execution. However, it is very likely that HFT will be available in five years’ time, he said. Few banks show electronic liquidity to HFT traders although Credit Suisse does have some clients trading directly with the bank on this basis.
Integration
Te broader growth of electronic trading for FX options is, however, continuing and is attracting a new breed of customer through better integration with electronic FX options platforms. “We are seeing the same process in FX options as we have seen in spot – once the product is more accessible electronically, new players come in and volumes rise,” says Schmuecker.
But, while customers are building interfaces internally across their different electronic trading platforms,
Schmuecker also says there is a move towards a less GUI-specific and service-orientated architecture. Te focus is more on getting the immediate service than building specific user interfaces, he says.
“Electronic access is making it cost-effective for more clients to trade FX options. Te securitisation platform means that any bank that can settle securities can now start trading FX options with us. Tey don’t even have to have a credit line with us because securities settle using delivery versus payment. Tis changes how the product can be marketed.”
Credit Suisse created PLUS to respond to client demand for cross-asset class trading and to integrate resources for clients. Te bigger focus, says Schmuecker, is to deliver a full suite of electronic solutions under Credit Suisse PLUS, and to continue to integrate their specialized research and analytics capabilities as well as build out the STP capability for FX options which will make trading and allocations easier for clients.
Out of the box
With high penetration across both the sell-side and buy-side, it is no surprise that Murex is also investing heavily in a solution for trading FX options that can be easily integrated. A key feature of Murex’s MX.3 system is to provide a rich integrated platform in which analytics, pricing, distribution and risk management functionalities are fully integrated and available out-of-the-box, while these components remain logically distinct to allow institutions to leverage on the openness in specific areas, such as analytics, without added integration cost.
Franck Dewannieux, Product Manager of Murex e-Trading platform, says: “When an institution integrates its own model for an existing product, no specific work is required for the distribution and risk computation components to use it. In order to facilitate the integration of these functionalities within the bank’s architecture, MX.3 provides a layer of Web Services that give access to a broad functional coverage (pricing , limits checking, RFQ workflows, operations, reports, etc.) and that rely on industry standards to offer state- of-the-art scalability, resilience and security features.”
All data generated by the trading activity is available to build MIS reports based on metrics such as the quote/ hit ratio per product, currency pair, customer tier, volatility level, spread level, etc, an important feature for strategic analysis.
48 | january 2012 e-FOREX
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168 |
Page 169 |
Page 170 |
Page 171 |
Page 172 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196