SDX from SuperDerivatives – the weapon of choice in the FX e-trading arms race

FX options today still only represent between 4-7% of the USD 4 trillion daily notional in FX, however they typically generate more than 15% of banks’ profits, and this disproportionate contribution looks set to grow as the switch from voice to electronic trading continues. The prospect of central clearing for interbank FX derivatives trades has seen the industry devote a significant amount of resources – money, time and people – to developing technical and operational capacity to cope with an arms race in electronic trading. These investments are mandatory and a strategic necessity for banks that wish to retain a competitive advantage.

First Published: e-Forex Magazine 42 / Product Launch / January, 2011

In this environment, with vanilla products centrally cleared, traded electronically and producing low margins, the most profitable opportunities for banks lie in offering investors and corporations more bespoke options products. As transparency and liquidity in vanilla products increases, it is likely that both investors’ confidence in using bespoke structures and banks’ hunger to offer these higher margin products will rise proportionately. To take advantage of this new opportunity, banks must ensure their structuring and sales teams are equipped with the optimum set of tools to maximise their productivity and efficiency in this arena. Launch of SDX To this end, SuperDerivatives, the derivatives pricing, management and revaluation provider, recently launched SDX, the next generation multi-asset front office system. SDX provides a set of remarkable structuring and sales productivity tools to equip a banks sales force. With a few clicks a salesperson can identify a zero cost strategy, back test...continued

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