OTC FX options market gears up for faster electronification

The share of electronic trading in the market remains low, but a 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 standardization 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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Systematic tools gain favor in fixed income

Automation is enabling systematic strategies in fixed income that were previously reserved for equities trading. The tech gap between the two may be closing, but differences remain.

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