An unprecedented number of banks entered the forex options category this year, though online options trading is still rare. The focus is on pre-trade pricing, though many banks have developed, or are developing, trading capabilities all the same.
Two years ago, Goldman Sachs and UBS Warburg developed systems for trading options online. And they remain the only two banks with this functionality. UBS Warburg wins the category for a second time because it neatly combines, in one application, a pricing calculator equal to any bank's, with click-and-trade functionality in vanilla and exotic options.
"As long as there continues to be an options market, click-and-deal is definitely the way to go," says one user of UBS Warburg's FX Options Trader (FXOT).
The banks that don't offer online options trading say that clients don't want it but that does not match the experience of UBS Warburg. The bank has migrated more than 20% of its options tickets to FXOT over the past two years, which in number of trades is more than some other banks trade online in spot.
What is more, UBS Warburg expects the online options trading business to continue growing. Already, on average, clients who have begun using FXOT have increased the volume of options that they trade with UBS Warburg by 40%.