David Gershons Founder and Chief Executive Officer, SuperDerivatives
David Gershons Founder and Chief Executive Officer, SuperDerivatives

Past and future evolution of online FX options trading

Dr David Gershon outlines the evolutionary pathway leading towards online option trading

The best place to start the journey into the evolution of online FX option trading is by tracking the story of its virtual parent: online currency spot trading. While foreign exchange as an asset class has typically spearheaded the commoditization process in financial markets, in this specific case we can learn a lot from the equity world. Stock trading moved online both in the professional and the retail market long before spot FX. There are several reasons for this. Firstly, technology; secondly, the separation between the buy side and the sell side which is controlled mainly by the banks; and thirdly behavioral socio-financial traits of market participants. Electronic trading of currencies existed long before the Internet became part of our daily lives. The pre-Internet electronic platforms, EBS and Reuters-Dealing, were exclusively used by the banks. When web sites for (spot) currency trading started to appear they were aimed at the buy-side and were supported by market-making banks. It only took two...continued

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