Electronification and the future growth of FX Options

Strides have been made in electronic trading for FX options recently and as Frances Faulds discovers there are still more to come.

First Published: e-Forex Magazine 57 / Special Report / July, 2014

For many years trading screens have been used primarily to support voice broking for FX options but in the past few years, there has been a slow shift towards the provision of streaming, executable prices. While banks shelved developments as they awaited clarity following the Dodd-Frank Act, it has been proven that the technology for trading complex instruments such as options is available and now with the recent regulatory push for greater transparency through electronic trading, banks are building options trading functionality into their single bank platforms.Asa Attwell, Global Head of G10 FX Options, at BNP Paribas says that although BNP Paribas has traded FX options electronically in the interbank market for ten years, e-FX option trading has never been a big part of the market. While interbank brokers show electronic prices, voice trading is mostly used and Attwell estimates that 95 per cent of the interbank market is still voice-based. “When we are talking about the...continued

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