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Articles tagged by FX options

CME to List Six New European-Style FX Options Contracts CME Group plans to list six new European-style weekly, monthly and quarterly FX options contracts that will be available to trade August 8, 2016. The currency pairs chosen for the launch are: AUD/USD, GBP/USD, CAD/USD, EUR/USD, JPY/USD ...
Saidi Set to Depart LCH Clearnet Sofiane Saidi is set to leave LCH Clearnet, where he currently works in NDF and FX options product development, according to market sources. Profit & Loss understands that although no official date has been set for Saidi’s departure from the ...
Tullett Prebon, GMEX Group to Develop Hybrid FX Options Platform Tullett Prebon has partnered with technology provider GMEX Group to develop a hybrid voice and electronic trading platform for FX options. The new trading solution will enhance Tullett Prebon’s offering to its clients, integrating GMEX’s request for quote (...
And Finally... Thursday marks an important day for financial markets with a fragmented regulatory regime about to come into force, and NDF and FX options markets are right in the firing line. Will the already fragile liquidity picture in these markets worsen?
A New Twist On An Old Investigation? FX Options Brokers Still Under Scrutiny In November last year Profit & Loss reported on an investigation by New York Attorney General Eric Schneiderman into practices and conduct on the FX options desks of three major inter-dealer brokers. Now, according to a report, that investigation is not only ongoing, but it has broadened beyond the original "spoofing" or "flying" of fake bids and offers, into a look at the what may be the inappropriate sharing of market information and the rigging or influencing of market auctions.
Hybrid FX Options Trading: Best of Both Worlds? In August, Tullett Prebon announced a partnership with GMEX group to develop a hybrid voice and electronic trading platform for trading FX options. But what are the drivers behind such a deal and can it really give Tullett an edge in today’s electronically traded markets? Nicola Tavendale writes. Despite a 24% decline in average daily turnover since 2013, global trading volumes in FX options remain significant at $254 billion, according to the most recent Bank for International Settlements (BIS) survey.
Capitalab Launches Compression for FX Options Capitalab, an entity within BGC Partners, has launched a multilateral portfolio compression service for FX options, as well as for interest rate caps and floors. Since June 2016, five FX options compression runs have been executed, in USD/JPY and EUR/USD, with the participation of respectively five and seven FX options dealers. In the last three interest rate options compression runs organised by Capitalab, participants have also included caps and floors, together with swaptions. Caps and floors – options on Libor and Euribor forward rates - are known to be capital intensive, because of their large notionals.
Digital Vega Rolls Out Intelligent Execution FX options trading technology provider Digital Vega has launched Intelligent Execution (IE), an engine that provides, the company claims, “a unique new FX Option execution and workflow management solution”. The firm says IE fully automates the option trade lifecycle from order upload, validation, price checking, execution and finally confirmation. All relevant parameters are user configurable to allow for changes in market conditions, risk limits, and specific currency pair liquidity. Users are also able to pair or net individual orders on the fly to further reduce execution costs.
And Finally... So it seems that another group of “victims” are suing members of the foreign exchange industry over alleged malpractice, this time the mis-selling of FX options.According to a report “banks and brokers” are facing action over derivatives sold around the Brexit event, but is this over-egging the pudding? Would banks really have not learned the lessons of the past decade and have their legal documentation sorted out? The FX industry could really do without another kicking, but as long as lines between segments remained blurred it will also be vulnerable to one.
CME Introduces “Triangulation” to Boost Options Liquidity CME Group has gone live with the “triangulation” of its volatility quoted FX options (VQO), a new system that links the VQO, premium quoted options (PQO) and futures books in order to boost liquidity. VQOs, which were launched on November 14, allow market participants to quote the standard 2:00pm expiration contracts in annualised volatility terms. When using a VQO, once a trade occurs the implied volatility input is converted into a USD premium using a standard options pricing model and the participants exchange a standard premium option and a delta hedge of standard underlying futures. This enables market participants to trade in volatility and clear in premium.
CME to Change FX Option Expiry Process CME Group says it will change the exercise and assignment rules for all options on FX futures contracts. On March 24, CME will amend how it handles options that end up precisely at the money on expiry. Currently, CME options that are at least one tick in or out of the-money at expiration are automatically exercised or assigned, and if the final underlying price happens to occur exactly at a strike price, both calls and puts at that strike are also expired without exercise.
JPM: 2017 to Be “Watershed” Year for FX Algo Usage A new survey released by JP Morgan, which almost 200 institutional FX traders took part in at the end of last year, shows that although just 12% of respondents currently use algorithms for trading, 38% plan to increase algo usage in 2017. This, in and of itself is not necessarily a surprising statistic. Numerous market commentators have been predicting for a few years now that more institutional FX trades will employ algorithms for a variety of reasons. These include navigating an increasingly fragmented liquidity landscape, helping firms to minimise their market impact, providing a more auditable trading record, and potentially enabling buy side firms to take on more risk themselves as some banks drift towards a more agency-focused business model.
SocGen Launches New Risk Event Tracker App Societe Generale (SocGen) has launched a new Web app that uses FX options to monitor the pricing of risk events, such as elections, central bank meetings or economic releases. The app, the SG FX Event Tracker (SG FX-ET), computes the overnight forward volatility that the FX options market expects for any trading day up to one year ahead, linked to the bank’s internal data and the weights that its market makers attach to risk events. The charting module is designed so that users can dynamically compare the relative pricing of an event according to different currencies and can directly compare the pricing of different events.
Sucden Launches OTC FX Options Service Sucden Financial has launched an OTC FX options service. The new offering is designed to provide users with the ability to price their own option structures online and benchmark those prices against independent data for greater transparency. It will offer clients the choice of trading via an online trading platform or traditional voice methods. Talking to Profit & Loss about the launch, Pritesh Ruparel, Sucden’s head of FX options origination and structuring, identifies three main goals for the new service. The first is improving the cost and availability of data for clients, the second is providing access to good liquidity and the third is improving the overall user experience for Sucden clients trading FX options.
Sucden Targets Growth Through Diversity Following the launch of Sucden Financial’s new OTC FX options service, Galen Stops talks to Noel Singh, head of e-FX business development at the brokerage, about how it’s planning to diversify its FX offering. Despite having an FX franchise that is over 30 years old, an e-FX offering that has been around for more than eight years and a balance sheet of over $100 million, Sucden Financial is not exactly a household name in the wholesale FX market. But the firm is now working to change that as it seeks to diversify its FX business in response to changing market conditions.
CME Gets Green Light for OTC FX Options Clearing Launch CME Group has received regulatory clearance from the US Commodity Futures Trading Commission (CFTC) to start providing clearing services for OTC FX options. The service will launch with dealer-to-dealer client clearing and is planned to be available in Q4. It will sit alongside CME’s suite of other FX cleared instruments, including listed FX futures and options, cash-settled forwards and NDFs. Although FX is not currently mandated for clearing, Paul Houston, global head of FX products for CME, says the move is in-line with the group’s aim to provide cost-effective clearing solutions for market participants.
CME Launches Wednesday Weekly FX Options CME Group has launched Wednesday Weekly FX options (Wednesday options). Wednesday options will be available in premium quoted and volatility quoted European style options with a 2 p.m. CDT fix on five major currency pairs: AUD/USD; GBP/USD; CAD/USD; EUR/USD; JPY/USD.  These Wednesday options will be available for trading and clearing on October 30, 2017, pending regulatory approval. CME Group has launched Wednesday Weekly FX options (Wednesday options), which expire on Friday. Wednesday options will be available in premium quoted and volatility quoted European style options with a 2 p.m. CDT fix on five major currency pairs: AUD/USD; GBP/USD; CAD/USD; EUR/USD; JPY/USD.  These Wednesday options will be available for trading and clearing on October 30, 2017, pending regulatory approval. Weekly options are designed to enable market participants to more precisely manage their currency risk during the week. Existing FX weekly options average daily volume reached a new record of 31,990 contracts in September 2017, which is up 76.6% compared to the same time period last year. 
And Another Thing... There's a lot of noise about the latest front running accusations in FX world, with people talking excitedly about a fundamental change in how the market operates, but it strikes me that the changes these people talk about have already happened. Does any one really carry risk any more? Aren't targets expressed not in P&L terms but in fees generated and market share (which is itself a quasi fee)? Nothing is going to change - including the lawyers getting rich at the industry's expense!
BNY Mellon Launches FX Options Trading BNY Mellon has launched its FX options desk, enabling clients to better hedge currency exposure and express their views on the future direction of FX markets. The bank says that clients now have access to a full-service currency trading desk, offering spot, forwards, non-deliverable forwards as well as options. “This offering complements an existing suite of broader FX services including FX custody, payments and hedging,” it adds. Options represent the latest step in a broad build out of BNY Mellon’s FX business – the bank has made a series of senior hires over the past two years and in January announced plans to launch an FX prime brokerage service.
BNP Paribas Continues Adding to G10 FX Options Desk BNP Paribas has appointed Baris Temelkuran as global head of G10 FX options trading. Based in London. Temelkuran joins the G10 FX management committee and reports to Neehal Shah, global head of G10 FX trading. Baris joins from Goldman Sachs, where he worked for 12 years, most recently in charge of its G10 and emerging market FX exotic options trading globally. In addition to Temelkuran, BNP Paribas has also added to its G10 FX options trading business with three further hires over the summer. Karim Javeri and Richard Collins joined the bank from Citi, and Adam Baines joined from Credit Suisse. All three are options traders and will report to Temelkuran.
CFTC Charges TFS Icap Over FX Options Broking Practices The US Commodity Futures Trading Commission (CFTC) has charged interdealer broker TFS-Icap with fraud and supervision failures. In a Complaint filed in the US District Court for the Southern District of New York, the CFTC alleges that, from approximately 2008 through 2015, brokers at TFS-Icap offices in the US and the UK routinely attempted to deceive – and did deceive – their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the FX options market.
In the FICC of It In this week’s podcast, Galen Stops lights the blue touchpaper and steps back to watch the fireworks by asking Colin Lambert about not only the Benchmark Fix, more specifically the research paper published this week, but last look as well following the news that a regional regulator is investigating the practice. Just to add to the mix, he also gets him going on another Lambert favourite, tracking error. They also discuss the FX Global Code and fintechs and ask, ‘should they be adhering and signing up to the Code?’ and Lambert shares some reader feedback on this week’s opinion piece on FX options brokerage.
And Another Thing... Today’s Irrational is very much based upon the ethos in which the accolades were imagined – in other words it’s based upon nothing more than its ability to irritate me. If we are being honest, this year has not been a vintage one for headlines – I don't know if it’s me but I sense the world is getting worn down by the constant bickering amongst politicians, most of whom turn to (at best) half truths when challenged. Throw in an increasing wariness of publicly stating anything humorous for fear of upsetting someone (which is very easy to do, another facet of today’s world seems to be extreme sensitivity) and the quality of headlines we saw just a year or two ago have gone missing.
Gill Named FX Head for Barclays in AP Barclays has announced the appointment of Pritpal Gill as head of G10 foreign exchange and FX options trading for Asia Pacific. Based in Singapore, he will be responsible for developing and driving the G10 FX Trading strategy in the region, the bank says. Gill has over 25 years of FX experience, mostly with Citi, from where he joins. He started his career at Citibank in London trading vanilla and exotic FX options, before moving eight years later to Lehman Brothers as global head of FX options trading. He then returned to Citi as head of FX trading for Asia, based in Singapore.
Digital Vega Makes Two Senior Hires Digital Vega hired Simon Lewis as head of interdealer solutions and Romain Camus as head of exotic options.Prior to this role, Lewis spent 20 years at Tullett Prebon, building an exotic options desk from scratch and ultimately being appointed as global head of FX options until leaving the firm in 2016.Camus joins from VTB Group, where he was executive director, head of FX structuring. He previously worked at Goldman Sachs and Deutsche Bank as a structurer. "We are very pleased to welcome Simon and Romain to our growing team. They bring extensive domain knowledge, many years of experience working in our core markets, and valuable contacts that will help to fuel our development,"