Frances Maguire
Frances Maguire

Currency Options: new dimensions to exchange-based e-trading

Frances Maguire looks at the changing landscape of e-trading in exchange-traded currency options and what the exchanges are doing to attract new customers and win volume from the OTC market.

The drive to trade currency options electronically has created an arms race amongst the exchanges where cutting-edge technology is being brought to the asset class for the first time in a bid to build liquidity and incentivise new entrants. Last year, the New York Board of Trade, which trades currency futures and options in New York and Dublin, began looking for an electronic platform and ended 2006 by agreeing to a full acquisition by InterContentinental Exchange (ICE). The futures contracts migrated onto the ICE electronic trading platform in November 2007 and it has yet to be decided when, and if, currency options will follow the same route. ICE, an electronic energy-trading marketplace, is well versed in successfully bringing the exchange clearing model to markets that had previously traded over-the-counter (OTC) so it will be interesting to see if they take up the mantle with FX options as the exchanges chip away at the OTC market for market share. Craig LeVeille, head of FX options at CME...continued

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