FX Options Embracing the potential of platforms

Regulatory requirements, clients’ drive for efficiency, and the experience of working from home during the COVID-19 pandemic are spurring a shift of FX option activity to platforms.

By Ian Daniels, Head of eFX Distribution, EMEA, Simon Keen, Head of FX Options Technology and Tim Albers, Head of FX Structuring, Asia ex Japan at Nomura Hedge funds, private banks and other clients are increasingly seeking to trade FX options on platforms, driven by regulators’ requirements for investors to prove best execution and the growing depth and range of offerings available. From a client perspective, aggregator and multi-dealer platforms are an attractive proposition, offering convenience, transparency and the potential for lower costs; they make the processing of price requests significantly more straightforward. In the past, many buy side clients relied on a handful of liquidity providers. The need to prove best execution has transformed how these users access FX option products. In order to comply with regulations, some users initially requested quotes electronically and simply captured a screenshot of the quotes in order to prove best execution. However, this process is cumbersome...continued

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