Frances Maguire
Frances Maguire

FX Options – enhancing the pricing and execution experience of electronic platforms

As advances in technology have meant that trading in vanilla FX options and structures is being more widely adopted, Frances Maguire looks at how pricing and execution on electronic platforms are now being enhanced.

It was with some incredulity that Mark Suter, CEO of the first electronic multibank FX options platform, Digital Vega, read the definition of a Swap Execution Facility (SEF) produced by the US regulator in 2010, because a SEF is exactly what he and his business partner had just built. “So theoretically we are almost compliant involuntarily, but the devil will be in the details,” Suter adds, much of which the industry is still awaiting. However, the likelihood is that, along with clearing, FX options will have to be traded electronically and even as the industry awaits the final definition of a SEF, it is gearing up for a move to electronic trading. Increasing adoption of e-FX Options With eleven banks pricing on the Digital Vega platform, daily trading volume across a range of currency pairs and structures, Suter says that adoption of electronic trading for FX options is steadily increasing as participants become more comfortable with online trading. Apart from being a pioneer in the...continued

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