FEATURE
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Te retail market is also embracing electronic trading platforms for FX options, with a growing number of retail aggregators in the spot market differentiating themselves by offering FX options. Best says the growing number of FX brokers offering FX options to retail investors will rapidly take market share.
He adds that because it is a lot easier for a client to be able to leverage existing technologies as opposed to combining multiple technologies, the strength of FX Bridge’s solution is that enables clients to add asset classes, such as commodities, equities and equity indices, alongside FX.
Divergence Stephen Best
“We have a range of trading, analytic, risk management, and post-trade solutions, delivered as modules and
APIs. Tese are all tightly coupled to ensure low latency, something that is always going to be important regardless of what GUI or API the user is connecting through.”
for spot FX trading, which means better pricing and better aggregation, and we are working on this.”
While there are some HFT trading strategies being employed, Best agrees that the liquidity and connectivity needed for HFT in FX options is only available, in a limited way, on exchanges and, he believes, it will be more than a year before there is much broader API connectivity for HFT.
For the FX options market to grow as a whole, Best believes there needs to be broader support of electronic delivery from banks , similar to spot and forwards, where almost all banks have some kind of offering. “Tere is a diverse set of requirements. For example, one of the largest groups of users of FX options is corporates so there is a requirement to be able to deliver electronic execution for the typical types of hedging strategies they like to do – strategies to protect their foreign payables, imports, exports etc. Ten, the broker-dealer market, dealing with hedge funds, is looking for electronic aggregation of pricing and liquidity. Tere is still a long way to go in terms of the development of functionality for competitive pricing.”
50 | january 2012 e-FOREX
One of the early providers of FX options, Deutsche Bank, is continuing to add options strategies based on client demand, according to John Bartter, head of Autobahn Options E-Commerce, at Deutsche Bank. He says: “On the back of this, we extended our currency offering to include streaming rates in non-deliverable emerging market currencies. We also provide streaming volatility grids so clients have an expanded overview of current options prices.”
John Bartter “For more complex structures, you are seeing more
exotic products being released onto platforms along with enhancements to multi-leg structuring geared toward making the pricing of multi-leg products more intuitive.”
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