OTC FX options market gears up for faster electronification

Share of electronic trading remains low but host of factors promise to change that for good

Good things are meant to come to those who wait. Those waiting for greater electronification of over-the-counter foreign exchange options have been waiting unusually long, but good things are finally on the horizon.

The $297.5 billion market is dominated by voice trading. The reasons include the products’ inherent complexity, lack of standardisation and low volatility, as well as the market’s relatively small size.

Some hurdles to electronic trading of OTC FX options are structural and are

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Outlook for e-FX: opportunities and risks for banks

As electronification spreads into new areas of FX trading, banks are under pressure to digitise more of their offerings to remain competitive. The race is now on to automate pricing, trading and hedging in areas such as non-deliverable forwards, swaps…

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