Reuters to relaunch FX option broking
The global information giant is about to try to crack the currency options market once again. Past attempts of Reuters and others to take the option market electronic have proved unsuccessful. Whether this is about to change remains to be seen.
Market sources say that Reuters is about to try to penetrate the FX options market again by launching a revamped matching service for currency derivatives at the start of October. Players seem split in their view of how likely it is that the beefed-up Reuters Matching for FX Options will succeed. The company has already had unsuccessful forays into the market, notably with its ICor venture, launched initially as a joint venture back in 2001.
The FX options market has proved reluctant to embrace electronic trading fully and the voice brokers still play a very active and crucial role in both price discovery and the provision of access to liquidity, especially in emerging markets. However, the hybrid Volbroker system, owned by TFS-ICAP, is said to be playing an increasingly important role.
Whether Reuters can replicate the success of Volbroker is debatable. Volbroker is backed up by TFS-ICAP’s voice brokers, and users say it combines the benefits of an electronic platform, such as transparency and straight-through processing, with the ability of the brokers to find liquidity.
However, many banks are dissatisfied – as they always have been – with the levels of commission they are charged.